Jeff Wieand tells of turbulent times for Business Jet lessors

These are currently hard times for business jet manufacturers. Rumors circulate of “white tails” (unsold completed jets) secreted away in locked hangars by manufacturers trying to maintain an atmosphere of healthy demand and business as usual.

Jeff Wieand tells of turbulent times for Business Jet lessors

Feb 08, 2017

These are currently hard times for business jet manufacturers. Rumors circulate of “white tails” (unsold completed jets) secreted away in locked hangars by manufacturers trying to maintain an atmosphere of healthy demand and business as usual.

Global aircraft leasing growing on low rates and rising air traffic

Aircraft lessors around the world continue to benefit from increased air travel, strong airline profitability, low interest rates and generally accessible funding markets. Fitch Ratings' latest Aircraft Leasing Sector Review reports, however, these variables are cyclical in nature or prone to temporary disruption, limiting the potential for accompanying positive rating actions.

Global aircraft leasing growing on low rates and rising air traffic

Sep 26, 2016

Aircraft lessors around the world continue to benefit from increased air travel, strong airline profitability, low interest rates and generally accessible funding markets. Fitch Ratings' latest Aircraft Leasing Sector Review reports, however, these variables are cyclical in nature or prone to temporary disruption, limiting the potential for accompanying positive rating actions.

News in brief

Leasing market confidence drops

Apr 25, 2017

Confidence in the equipment finance market dipped in April, according to the latest poll of leading participants carried out by the Equipment Leasing & Finance Foundation. Its monthly confidence index for the equipment finance industry (MCF-EFI) slid to 65.8, easing from the 71.1 reported in the March index. The index provides a qualitative assessment of both the prevailing business conditions and expectations for the future, as reported by key executives. Survey respondent Paul Menzel, president & CEO, Financial Pacific Leasing, said: “I believe our industry is in a good place given portfolio performance, access to capital and general economic stability. However, the supply and demand imbalance is causing spreads to stay compressed and credit requirements to be relaxed in order to meet growth expectations. This equation is not healthy in the long run.” Downward trends The proportion of respondents who believe business conditions will improve over the next four months has almost halved, down from 70% in March to 36.7%. Around two-thirds (63.3%) of respondents believe business conditions will remain the same over the next four months, an increase from 20% in March. There has been a similar slump in the proportion who believe demand for leases and loans to fund capital expenditures will increase over the next four months, which now stands at 40%, a decrease from 70% in March. Half (56.7%) believe demand will “remain the same”, up from 20% the previous month. Fewer respondents (46.7%) now believe that US economic conditions will get “better” over the next six months, a decrease from 60% in March, while 53.3% indicate they believe the US economy will “stay the same”, an increase from 36.7% the previous month.

GATX sees railcar leasing stall

Apr 25, 2017

Chicago-based railcar leasing company GATX Corporation has blamed overcapacity and a slow start to the year for a drop in income during Q1 2017. It reported first quarter net income of $57.5 million, compared to $69.3 million in the first quarter of 2016. Brian Kenney, president and chief executive officer of GATX, said: “For the second consecutive quarter, North American car loadings increased and railroad velocity decreased on a year over year basis. However, continued railcar oversupply, a large railcar manufacturing backlog, and low fleet utilization among certain competitors combined to prevent general lease rate improvement in the first quarter. “Consequently, while GATX’s fleet utilization increased to 99.1% in the quarter, the renewal lease rate change of GATX’s Lease Price Index decreased by 32.6%, with an average renewal term of 29 months. Our renewal success rate was excellent at 72.4%. Our commercial team effectively deployed railcars and displaced competitors’ railcars despite the idle capacity in the industry.” Rail North America reported segment profit of $93 million in the first quarter of 2017, compared to $108.7 million in the first quarter of 2016. Kenney described the company’s Rail International division as producing “solid operating results”, with $13.4 million profit in the first quarter of 2017, compared to $12.6 million in the first quarter of 2016. He said: “GATX Rail Europe maintained high fleet utilization of 95% despite railcar oversupply in the petroleum market. We continue to upgrade customers’ fleets with new railcars, while successfully assigning displaced, older cars to new customers.” American Steamship Company (ASC) reported a segment loss of $0.2 million in the first quarter of 2017, compared to a segment profit of $0.9 million in the first quarter of 2016. Kenney pointed out that ASC’s operations are limited during the first quarter as the vessels are in winter lay-up from mid-January through late-March. GATX’s first-quarter 2016 results included a net gain of approximately $1.5 million associated with the planned exit of the majority of Portfolio Management’s marine investments. Kenney concluded: “The Rolls-Royce and Partners Finance affiliates continue to perform very well. Demand for spare aircraft engines remains solid across the fleet, and 2017 investment prospects are positive. The year is progressing as we expected, and therefore at this time our 2017 full-year earnings estimate is unchanged.”

Ally’s Clearlane to finance

Apr 25, 2017

Ally Financial has launched an online marketplace called Clearlane designed to provide a simple and straightforward way for consumers to connect with leading auto finance providers to locate finance for vehicles. Customers can use the marketplace to connect with numerous national, regional and local providers, offering auto finance and refinance products. The Clearlane site was brought to market following Ally's acquisition of BlueYield, a California-based technology company, in 2016. The site was enhanced to simplify the customer journey and experience, and rebranded to align with Ally's broad assortment of products and services. According to data from the site, customers reduced their monthly payment on average by $100 per month by refinancing their vehicles with a new provider. Tim Russi, president of auto finance at Ally, said: “With Clearlane, Ally adds a unique online platform to our digital financial products and services in the auto space, allowing consumers to easily secure financing or refinance their vehicle through a trusted source. “We are excited about the opportunities to offer more financing and F&I products through the platform in the future, and to eventually leverage the technology to power online sales for our dealers."

Penske launches connected fleet solutions

Apr 25, 2017

Penske Truck Leasing has announced the launch of its connected fleet solutions, saying it can now connect its systems with virtually any truck and engine configuration or telematics service provider using a proprietary, device-neutral data platform. The move is designed to enable faster problem solving during breakdowns and improved vehicle maintenance through remote diagnostics, location data, and big data analytics, opening the way to providing predictive vehicle maintenance. Brian Hard, president and CEO of Penske Truck Leasing, said: “We’re very pleased to begin formally offering connected fleet solutions to customers. “We have designed these connected fleet solutions to improve vehicle uptime, safety and compliance and help keep customers well-informed about their vehicles." Penske believes it is the first truck leasing company to provide connected fleet solutions at such size and scale, with more than 20,000 vehicles in its truck rental and logistics fleets using the technology and customer vehicles being added daily. Consulting group The company has also announced it has established an onboard technology consulting group within its existing operations. The group was created as a value-added service to help Penske’s customers to address the proliferation of technology choices and questions fleet operators have about selecting, evaluating, implementing and using onboard systems. Penske takes a device-neutral approach when helping its customers with evaluations. Art Vallely, executive vice president and COO at Penske Truck Leasing, said: “Onboard fleet technology systems and options are changing rapidly. “Many fleet operators simply cannot keep up with the rate of change. Our goal in creating this expert team is to provide customers with an objective, fact-based view of the various onboard technologies such as telematics, ELDs, in-cab cameras and other emerging technologies going forward.” Penske Truck Leasing’s fleet includes more than 240,000 vehicles across North America and its customers use a variety of onboard systems on these vehicles. Vallely added: “We have in-depth and road-tested experience with all of the major onboard technology service providers. We’re now bringing this experience together as a value-added service to our customers."

Getaround collects $45m funding

Apr 25, 2017

Peer-to-peer car-sharing platform Getaround has raised $45 million in new capital, including investments from two major auto makers. The investment will fund further innovation in its patented connected car technology, which allows people to safely and securely share their cars with other drivers, who rent and unlock them via their mobile devices. The Series C equity round was led by Braemar Energy Ventures, a venture capital firm specializing in energy technology with investments across the automotive space. Also joining the round are leading global automaker Toyota Motor Corporation, through its investment in SPARX Group, and SAIC Capital, the venture capital investment arm of Shanghai Automotive, as well as existing venture investors, including Menlo Ventures and Triangle Peak Partners. Since its Series B financing in 2014, Getaround has evolved its integrated hardware and software technology platform to enhance the user experience, enabling renters to instantly reserve, locate and unlock vehicles through the Getaround app, without needing to collect the car keys. The company has recently secured a number of strategic partnerships to broaden the ways its technology can be used, including a technology integration with Toyota, alongside partnerships with Uber and carmakers, which it says will transform consumer access to mobility. US expansion plans The latest infusion of capital will allow Getaround to continue investing in scaling its offering in San Francisco, building key developing markets, such as Chicago and Washington D.C., and expanding into new markets such as the Tri-State New Jersey area, which was announced earlier this month. It also provides Getaround with additional resources to strengthen its partnerships with leading global OEMs, local innovators like San Francisco's City CarShare, and a growing number of local government agencies that will help the company continue to expand. Jessica Scorpio, founder and CMO of Getaround, said: “We are excited to continue driving growth in existing markets, while also bringing Getaround to more communities across North America. “This capital accelerates our ability to build upon partnerships and increase marketing efforts, further strengthening our ability to enable as many people as possible to share their cars.” Getaround’s offering combines its connected car technology with auto insurance, so that its members can rent nearby cars and save money on auto payments, insurance and maintenance. Owners benefit from car-sharing as the extra income offsets their vehicle costs. Getaround currently has nearly half a million users with thousands of cars available to rent instantly in 13 cities across the US. Sam Zaid, founder and CEO of Getaround, said: “By turning any vehicle on the road today into a connected car on Getaround, we have created the only marketplace to instantly share cars. “We've already seen this become an important part of how people access vehicles, and we are confident that it will be fundamental to the way cars are used in the future as they become increasingly connected and autonomous.”

Rubin named Allstate Leasing president

Apr 25, 2017

Peter Rubin has been named as president and chief operating officer of Allstate Leasing and of HRAC Finance, which are part of the MileOne vehicle and equipment leasing group. Rubin joined MileOne in 2010 as vice president and general counsel. Over the subsequent five years, he helped to manage MileOne’s dealership acquisition activity and built what started as a small collections department into a legal and compliance resource serving MileOne Automotive’s 73 dealerships located in Maryland, Pennsylvania, Virginia and North Carolina. Steve Fader, MileOne CEO and president, said: “Peter has an entrepreneurial background and is uniquely equipped to lead our consumer finance and leasing operations to the next level. “We share the belief that both HRAC and Allstate Leasing are well-positioned in the market for expansion, and I am excited for the prospects of dynamic growth for both companies under his stewardship.”