IRELAND Trends and Developments Contributed by: Maria McElhinney and Alice Boland, A&L Goodbody LLP
platform sales in the regional aircraft space (eg, DAE’s acquisition of Nordic Aviation Capital) were prominent. Trading volumes in the secondary market were robust with lessors and airlines both actively buying and sell - ing aircraft to manage fleet age and capitalise on high asset values. Capital availability was key for these acquisitions to occur with purchasers availing of numerous types of financial products to make these transactions suc - ceed. The financing trends in the aviation industry in 2024 and for the first few months of 2025 has reflected a sector in transition. This has been buoyed by strong investor appetite, a resurgence in capital markets activity and continued innovation in funding struc - tures. Supply chain issues Although finance availability has been plentiful for numerous lessors, the lack of available aircraft places a constant strain on the industry. The aviation industry continues to grapple with the persistent supply chain issues which started during the COVID-19 pandemic. These issues primarily relate to challenges in securing parts, labour shortages and engine delivery issues, resulting in delayed aircraft deliveries and slower fleet expansion. Market data shows that approximately 1,200 com - mercial passenger and freighter aircraft were delivered in 2024, representing a reduction from 2023 totals and well below the peak of 1,813 aircraft in 2018. The backlog for ordered aircraft has reached almost 17,000 with some delivery dates as far out as 2038. The supply chain issues have resulted in an aged global fleet and according to the IATA, the average age of the global fleet has risen to a record 14.8 years, representing a significant increase from the average of 13.6 years for the 1990-2024 period. An older fleet and increased fleet utilisation rates has resulted in an increased need for maintenance services and higher fuel burn. According to market analysis, Airbus’ and Boeing’s 2025 first quarter delivery data suggests significant challenges on the path to achieving their respective
delivery targets for 2025. The consensus, within the industry, is that it will be closer to the end of the dec - ade before production levels improve to pre-COV - ID-19 highs. The background to these challenges is that demand for air travel continues to trend upwards with the IATA forecasting an 8% growth in traffic in 2025. The shortage and backlog of aircraft may limit les - sor’s growth strategies in the medium and long term. However lease rates were higher at the end of 2024 than they were the previous year across most asset types. Throughout 2024 lessors saw nearly all flyable aircraft placed on lease. Asset values also increased through 2024 with older narrowbodies seeing the larg - est increases in market values throughout 2024. The supply demand imbalance has led to increased trad - ing on the secondary aircraft market and an increased amount of lease extensions. The rise in lease rates and asset values has decisively shifted the balance of power towards lessors. Airlines, constrained by supply shortages and the need for capacity, have lost some of their previous negotiating leverage. Lessors now enjoy higher returns and can often be selective in their counterparties and asset placements. This dynamic is expected to persist as long as supply constraints remain, reinforcing the stra - tegic importance and financial strength of the Irish leasing sector within the global aviation sector. Tax changes Changes in taxation practice and legislation through - out 2023 and 2024 has prompted many aviation lessors to review group holding structures. Aviation structures make use of special purpose vehicles (SPVs) through which aircraft are owned and leased and intra-group funding is funnelled through. The Irish Revenue Commissioners (the “Revenue”) had histori - cally viewed such SPV entities as ”trading” entities provided that these entities were part of an active trading group. Entities categorised as “trading” benefit from a 12.5% corporation tax rate (subject to any top-up required due to the application of the Pillar Two provisions (if applicable)). 2024 saw changes to the Revenue’s practice regarding the categorisation of entities as
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