We welcome back Mark Streeter and Jamie Baker from JP Morgan Chase.  We discuss what happened in 2024 and what's likely to happen in 2025 in commercial aviation.

The conversation provides a comprehensive update on the airline industry, focusing on market trends, capacity discipline, leasing strategies, and financial maneuvers such as sale leasebacks. The speakers discuss the implications of these factors for 2024 and beyond, highlighting the evolving dynamics of the airline market and the influence of OEMs on capacity and leasing strategies. They also reflect on unexpected developments in aircraft recovery and the overall financial health of airlines. In this conversation, the speakers delve into the complexities of airline profitability, particularly focusing on Spirit Airlines and its challenges in competing with major players like Delta. They discuss the evolving business models in the airline industry, emphasizing the shift from traditional loyalty programs to more currency-like systems. The conversation also touches on consumer behavior, the changing dynamics of airline club experiences, and the cultural value that airlines like Southwest bring to the table. Looking ahead to 2025, the speakers share their predictions for the industry, highlighting potential shifts and opportunities.

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In this conversation, Mike Platt and John Shavinsky share their diverse backgrounds in aviation, discussing their journeys from engineering to legal roles and the evolution of the aviation industry. They delve into the complexities of aircraft leasing, the challenges faced by airlines today, and the implications of current market dynamics on future aircraft orders. The discussion highlights the importance of experience and knowledge in navigating the aviation landscape, especially in light of recent industry changes. This conversation delves into the complexities of the aircraft leasing market, exploring the challenges faced by airlines and lessors in a rapidly changing economic landscape. The discussion highlights the long-term implications of aircraft orders, the competitive nature of leasing, and the need for flexibility in contracts. The speakers also reflect on the future of aircraft technology and the importance of strategic planning in the face of uncertainty. In this conversation, the speakers delve into the complexities of the aircraft leasing market, discussing the challenges of maintenance, the dynamics of aircraft pricing, and the future of airline economics. They explore the implications of rising costs for airlines, particularly in the context of Air India's growth and the broader aviation market. The discussion also touches on the role of lessors in managing aircraft and the challenges faced by OEMs in meeting delivery demands. Overall, the conversation provides valuable insights into the current state and future outlook of the aviation industry.

Brian Rynott shares his journey through the aviation industry, detailing his early passion for aviation, career transitions, and experiences at major companies like American Airlines and AWAS. He discusses the evolution of Intrepid Aviation and his current role, providing insights into the aviation landscape and personal anecdotes that shaped his career. In this conversation, Brian Rynott discusses his journey in the aviation industry, particularly during the COVID-19 pandemic. He emphasizes the importance of building long-term relationships with clients, understanding the intricacies of the business, and leveraging data to inform marketing strategies. Rynott also highlights the evolving role of airlines as strategic buyers of aircraft and the need for lessors to adapt to these changes. The discussion underscores the significance of personal interactions in a digital age and the value of adding insights beyond just financial metrics in business transactions. In this conversation, the speakers discuss the evolution of aircraft buying processes, the maturity of the leasing industry, and the rise of lessors and new financial structures. They explore the changes in the aviation finance landscape, the impact of market dynamics on leasing strategies, and the comparative analysis of aviation with other capital-intensive industries. The discussion highlights the importance of adapting to industry changes and the future outlook for aircraft leasing.

Summary

In this conversation, Jochen Schnadt shares his lifelong passion for aviation, detailing his journey from aspiring pilot to air traffic controller, and eventually to founding JetMagic and Fly4 Airlines. He discusses the challenges faced in the airline industry, particularly during the COVID-19 pandemic, and the evolving consumer behavior that impacts travel patterns. Jochen emphasizes the importance of adaptability in aviation and reflects on the industry's need to improve its narrative regarding environmental challenges. The discussion also touches on the role of ACMI in modern aviation and the significance of understanding market dynamics.

Takeaways

• Jochen's passion for aviation began at age six.
• He transitioned from aspiring pilot to air traffic controller.
• JetMagic faced challenges due to undercapitalization.
• The airline industry is complex and often frustrating.
• COVID-19 has fundamentally changed consumer behavior.
• ACMI has become a strategic tool for airlines post-COVID.
• Seasonality presents both risks and opportunities for airlines.
• Consumer preferences are shifting towards cooler destinations.
• The adaptability of the aviation industry is remarkable.
• The industry needs to improve its public relations regarding environmental impact.

Sound Bites

• "I was 20 years younger and had more energy."
• "The adaptability of the industry is just unbelievable."
• "COVID has been a catalyst for seismic shifts."

This episode turns the tables on Gueric and Courtney by having industry listeners interview them.  David Sims and Brian Rynott join to torture the original hosts with questions about themselves.  This podcast touches on the history of the podcast, as well as leadership styles and lessons learned.

Adam Pilarski shares his background and journey in aviation, from his initial disinterest in the industry to his career at McDonnell Douglas and eventually joining of Avitas. He emphasizes the importance of understanding the logic behind business decisions and the value of being authentic and truthful in his work. Adam also discusses the evolution of data and resources in the industry, highlighting the need to balance the use of advanced models with a clear understanding of the underlying reasons and relationships. He concludes by expressing his passion for economics and his enjoyment of his work. In this conversation, Adam Pilarski discusses his experiences in the aviation industry and shares his insights on various topics. He talks about his time at McDonnell Douglas and his transition to Avitas, highlighting the changes he has witnessed in the industry over the years. Adam also reflects on some surprises he encountered, such as the rapid fall of communism, and the importance of timing in making accurate forecasts. He emphasizes the need to consider factors like population growth, geopolitical issues, and technological advancements when assessing the future of aviation.

Bryson Monteleone shares his journey in the aviation industry, starting from his work in politics to his transition into aviation consulting. He discusses his experience working for Mort Beyer and the valuable insights he gained from the industry luminary. Bryson also talks about his time at MBA and the challenges he faced, including a lawsuit over his first appraisal. 

He then explains his role at PwC and the unique services his team provides in aviation finance advisory. The conversation touches on the changing approach to appraisals and the evolving needs of clients in the industry. The conversation explores the granular nature of aircraft valuation and the challenges of defining value in the aviation industry. 

The valuation approach requires a breakdown and build-up of value, taking into account various factors such as individual aircraft structures and components. The conversation also touches on the importance of considering the exit paradigm and the impact of COVID-19 on valuation methodologies. The discussion focuses on the role of appraisers in the sustainability conversation and the need for transparency and education in the industry. 

Bryson highlights the complexity of valuing aircraft in the context of emerging sustainable technologies and the importance of scenario building and expertise in providing informed advice to clients. 

The conversation with Bryson Monteleone covered various topics related to the aviation industry. One theme that emerged was the passion and enthusiasm of the younger generation for aviation. They are eager to learn from the experiences of older professionals and appreciate the stories and anecdotes that shape the industry. Another theme was the evolution of technology in aviation and its impact on the industry. The discussion touched on the challenges and opportunities presented by new technologies, such as un-ducted fans and sustainable aviation fuel. The conversation also highlighted the importance of stability and maturation in adopting new technologies. 

Rob Dewar shares his journey in aviation, from his childhood fascination with planes to his career at Bombardier and Airbus. He highlights the importance of curiosity and a passion for learning in pursuing a career in aerospace. Dewar also discusses the challenges and milestones of developing the C-Series (now A220) aircraft, including the development of a full-scale wooden mock-up and the successful first flight. He emphasizes the global nature of the aviation industry and the need for continuous innovation and sustainability in the coming years.

Steve Rimmer shares his journey in the aviation industry, which started with his upbringing and passion for airplanes. He discusses how chance and being in the right place at the right time played a role in his career. Steve talks about his experience working with British Aerospace, Security Pacific Bank, Curtis & Company, and Guggenheim Partners. 

He emphasizes the importance of having a strong team and expertise in understanding the asset in aviation investing. Steve also discusses the challenges of commoditization in the industry and the need to go beyond spreadsheets to make informed investment decisions. In this conversation, Steve Rimmer discusses the challenges and opportunities in the aircraft leasing industry. 

He emphasizes the importance of understanding the big picture and the value of personal relationships in the industry. Rimmer also highlights the need for a forward-looking mindset and the ability to adapt to changing dynamics. He discusses the impact of delays in aircraft deliveries and the potential overtrade opportunities for airlines. Rimmer also explores the future of the industry, including the role of engine OEMs, the potential for new aircraft programs, and the importance of managing risk.

Frank O'Hagan shares his journey in the aviation industry, from growing up at an airport to working in aircraft maintenance and transitioning to the banking side of aviation. He discusses his experiences with aircraft, leasing, and the challenges of managing aircraft transitions and inspections. The conversation covers a wide range of topics related to the aviation industry, including the role of technical teams in auditing maintenance facilities, the responsibilities of a head of marketing, challenges and opportunities in the leasing industry, the impact of environmental regulations, and the importance of maintenance skills in the leasing industry. The conversation covers the challenges and complexities of aircraft maintenance and the involvement of lessors in the MRO space. It also delves into the creation of a transportation training center for vision-impaired individuals, as well as the significance of becoming an ISTAT certified appraiser.