Geven and Velantis Seat Financing Solutions have entered into an agreement to offer passenger seat leasing services to airlines, operators and aircraft lessors. This agreement is intended to provide a new way to financially support the acquisition of new passenger seats.
This agreement follows detailed discussions between the two companies, which started during the 2018 Aircraft Interiors Expo. According to the companies, the leasing option for acquiring new passenger seats has been an idea mooted in the cabin interiors industry for several years, but until now there have been no solutions available on the market which offer this directly from the seat vendor to the seat end user. The only option was for airlines to autonomously seek funding to finance the purchase of new seats from banks or other financial entities. In most cases the leasing terms and rates offered for acquisition of the asset (passenger seats) are not competitive due to the relatively unknown request of financing where there is no historical track record of residual value and re-marketing practices, according to the partners.
However, as Rodolfo Baldascino, marketing and sales manager at Gevenexplains, “the overall scenario in the industry has dramatically changed in the last few years. New aircraft monthly deliveries are increasing, the world-wide fleet is growing, and the average age of aircraft will increase year by year, thus operators of large, medium and small sized airlines will be faced with important cabin revamping activities in the next few years. Furthermore, brand image is a key competitive factor of success for airlines and this is achieved by consistency of cabin appearance across the fleet. In this scenario the need for new seats becomes more of a priority, especially for leased aircraft transitions from one operator to the next.”
“In our past experience,” Baldascino continued, “some airlines have a real urgency to modernize their cabin to maintain competitiveness and consistency with their business model; however, due to the lack of financial resources, they are unable to implement this seat replacement project. A significant number of projects do not come to fruition because of these budget constraints, despite the fact that we are technically able to meet their requirements in terms of offered product and program lead-time for delivery.”
Geven will offer leasing as an additional payment/financial option for seat acquisition as part of the commercial proposal for both line-fit and retro-fit aircraft seat sales. During negotiations with Geven, those customers interested in learning more on seat leasing options will liaise with Velantis experts who, on the basis of the terms offered by Geven and pending a risk/credit assessment, will calculate a specific leasing proposal for them, highlighting leasing terms, duration and monthly rates to be paid.
“We have made a rigorous analysis of the aircraft interiors market and found it very attractive in the long-term,” stated Fiachra Kirwan, CFO at Velantis“. As a result, we have decided to invest specific assets to shape an effective passenger seat leasing service. Geven has been identified as the most flexible and adaptive seat vendor on the market and in partnering with them we expect to see an increase in their seat sales, since many airlines will now be able to implement new seat projects by spreading the financial impacts over a longer period of aircraft operations. Finance-wise, the leasing option also offers advantages in terms of positive impacts on airlines’ yearly expenditures and cost profile and it also lightens the balance-sheet assets.”
“The more seat leasing becomes an established practice among customers, the more effective the management of these assets within the industry will become,” continued Kirwan. “And consequently the residual value of seat assets at the end of the lease period will grow. The entire industry will benefit from this.”