The sprawling aircraft leasing community is bound to consolidate, though it is unlikely to get down to just a handful of players, the top executive of GE Capital Aviation Services (GECAS) said.

“I think rationalization of leasing companies will occur over time, [but] that doesn’t mean we’re going to go from 150 back down to five,” GECAS president and CEO Alec Burger said during an investors briefing at the recent Paris Air Show. “It’s easy to invest money. You’ve got to be able to get the money back.”

Despite its position as the industry’s largest lessor, GECAS’ strategy includes diversification to ensure it maximizes business opportunities and creates a better business mix to survive inevitable bumps. One example is the expansion of its freighter fleet. Only 4% of GECAS’ 1,500-aircraft fleet is freighters, and the lessor sees an upside. 

GECAS used the Paris Air Show as a backdrop to announce it placed its third order for Boeing 737-800 converted freighters (BCFs) in three years, committing to 10 and adding 15 purchase options. The move gives GECAS a maximum of 65 737-800BCFs and gives it an outlet for more of its 737-800s when they reach midlife as passenger aircraft. Also in Paris, GECAS announced a deal to lease 15 more 737-800BCFs to Amazon, giving the e-commerce giant a total of 20—all leased from the GE subsidiary and operated by either Atlas Air Worldwide or Air Transport Services Group.

“This is a tremendous life-extending, asset-maximizing defensive play for us that has actually turned out to be attractive in terms of returns that we can generate,” Burger said. “We are going to continue to modestly grow the share of our portfolio that’s invested in the cargo space.”

Near-term, Burger acknowledges that the aircraft leasing sector—like most of commercial aviation—is navigating through some headwinds, with global trade tensions and a deceleration in passenger demand growth topping the charts. 

“Geopolitical uncertainty is rampant. There’s obviously no question about that,” Burger said. “Trade talks between US and China, in particular, [specific] country hotspots, Brexit, to name a few.”

But, he added, these issues are either short-term or isolated enough keep the company bullish.

“We are still positive on a long-cycle, long-term industry outlook,” he said.

Sean Broderick, sean.broderick@aviationweek.com