Why do helicopters tend to maintain high residual values?
First, I would say “good,” not “high” when discussing residual values. Second, aircraft values do change over time, and some aircraft types change more rapidly than others, sometimes due to mission equipment and other times due to demand for the particular aircraft. Assuming continued demand, what ultimately drives helicopter values are 1) the “utility” of the asset, 2) Original Equipment Manufacturers (OEMs) maintaining production to match demand; and 3) pricing of substitutes for the existing aircraft.
Clearly the helicopter leasing market is “hot” right now but is there a concern that the bubble might burst?
So long as OEMs don’t overbuild, there is no bubble – end user contracts dictate demand, not the leasing companies themselves. Now, there may be a “bubble” of interest in starting helicopter leasing companies, but that will eventually pass and the ones that don’t achieve scale to operate their businesses will be acquired or otherwise vanish over time.
What might the impact of leasing be on the industry, for example with smaller operators with light helicopters in the non-oil and gas segments?
In the US, many light helicopters are already leased, particularly in EMS, but also news gathering and firefighting. Lower valued assets are harder for us to lease due to the level of underwriting and technical supervision we practice, but some lessors may find this market attractive. We have begun to lease a number of light aircraft outside the US for EMS missions.
From your perspective, how do you explain the advantages of operating lease, where the lessor retains ownership of the helicopter, as opposed to financial lease to prospective clients?
With leasing, operators benefit with flexibility of being able to pay for an aircraft for a limited duration, with no down payment. When their contract ends, they can return the aircraft to the lessor if they don’t have another use for it. With bank leases, operators may face restrictions imposed by more traditional lenders, for instance, if they want to move from one country to another. Operating lessors provide a lot more flexibility at a reasonable cost; helicopter operators are our sole customers and we offer custom financing solutions that meet their needs.
How will Waypoint Leasing’s business model continue to perform in a competitive market during the next five years?
While there’s formidable competition, we are confident in our long-term prospects in this market and are fortunate to have a well-known and well-capitalized sponsor group that supports us. We will continue to grow our business by providing unique and attractive financing solutions to our customers and continuing to build our highly experienced helicopter and leasing team as conditions allow. With 19 lending institutions in our debt facility and $1.2 billion in total capital commitments, we will be here for the long term.
What are the key objectives for Waypoint Leasing in exhibiting at Helitech International 2014?
Our primary objective of exhibiting at Helitech International 2014 is reaching our global customer base, along with prospective customers, with our unique and tailored helicopter leasing solutions. Our team has tremendous experience as operators, fielding new aircraft types, and that allows our customers to benefit when we provide more than just a lease – Power by the Hour support, spares planning, supervising and sourcing conversions and upgrades, among other offerings.