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British Airways to Lease Aircraft as a Cost-Saving Strategy

To buy or not to buy: IAG boss Willie Walsh has announced that the company is looking to lease new craft in order to make expansion more cost-effective.

Airliners certainly aren’t cheap, but as International Airlines Group (IAG) looks to grow its fleet of A380s, it says it is now considering leasing aircraft secondhand for a more cost-effective expansion.

CEO Willie Walsh confirmed that these plans were part of a wider strategy to increase the number of leased planes within the company’s fleet.

Walsh confirmed the move at the Airline Economics conference in Dublin on Monday.

“We have options on A380s … but we are not going to exercise them because they are too expensive. We see the option of leasing them second hand as an attractive opportunity,” he told the conference, as reported by Reuters.

Walsh also added, “We see going forward probably a greater mix of leased in the fleet than we’ve traditionally had.” He also said that IAG was looking to lease or purchase more secondhand Boeing 777-300ERs.

Because airlines are usually able to secure reasonable discounts on the order of new aircraft, leasing has been seen as an expensive way of enlarging a fleet. However, as experts at the conference explained, leasing is now becoming a more popular choice, especially as airlines look to shrink or grow their fleet in alignment with market demand.

Responding to Walsh’s comments, Steven Udvar-Hazy of Air Lease Corporation said, “The adversity to off-balance sheet leasing from the mega carriers of the world is gone forever.”

Walsh explained that because the A380 suited only a small number of routes, IAG’s impetus to acquire the craft would be limited.

The Airbus-manufactured craft has not yet been received into the secondhand market, but the first leased wide-body planes will return to the market next year. Malaysia Airlines is also looking to shift some of its A380s as it gradually restructures.

However, Walsh confirmed to journalists at the conference that, “There’s no time frame, it will depend on when aircraft become available, we’re not in an immediate hurry.”

[Photo: Airbus]

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