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Aercap chief expects winter of discontent for airlines

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Planning: Aercap boss Aengus Kelly said the company does not believe 'newer aircraft are always better' when it looks at its portfolio

Planning: Aercap boss Aengus Kelly said the company does not believe 'newer aircraft are always better' when it looks at its portfolio

Planning: Aercap boss Aengus Kelly said the company does not believe 'newer aircraft are always better' when it looks at its portfolio

AERCAP boss Aengus Kelly expects some airlines will struggle this winter amid rising fuel costs, but believes his business will be able to manage the impact of any defaults.

The aircraft-leasing business published third-quarter results yesterday which showed an 8pc decrease year-on-year in revenue for the period.

Net income - a measure of profit used by Aercap - also fell slightly in the period to $264m (€233m) from $266m a year before.

Mr Kelly told analysts yesterday that he does expect stress in the industry over the winter, but said it was "the normal cut and thrust of the industry". Airlines facing financial difficulty is bad for aircraft lessors as it puts lease payments in jeopardy.

"The industry is in a better place than it was 10 years ago to cope with this, and so far... we have not seen a significant wave of bankruptcies," Mr Kelly said. "The major markets of the world in North America, Europe and domestic China still remain strong."

The company also announced a new $200m share-buyback programme yesterday, while Mr Kelly said the company does not believe "newer aircraft are always better" when it looks at its portfolio.

"We have been very careful with our portfolio-management strategy to ensure that we only have the most in-demand aircraft and that age is a secondary consideration," he told analysts.

"There are plenty of excellent older aircraft, just like there are new aircraft that we would not purchase today," he added.

"The average age of our current technology aircraft is over 10 years and we are very confident that these aircraft will be in demand for the next 12 years thereby consuming the remaining economic value and reducing any impairment risk."

Ryanair boss Michael O'Leary said last week that it will be a "grim winter" for the industry, with some airlines likely to go bust. He said Ryanair would "speed up the consolidation process by being very aggressive on pricing".

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