Aircraft lessor AerCap says prolonged high oil prices could bring opportunities

By Padraic Halpin

DUBLIN, April 29 (Reuters) - The head of the world's largest aircraft leasing company, AerCap AER.N, said on Wednesday that higher fuel prices have had little impact on the sector so far, but a prolonged spike would pressure airlines while potentially benefiting lessors.

Chief Executive Aengus Kelly said demand for AerCap's aircraft remains strong and airlines have not changed their behaviour because of the Middle East conflict. More than half of the company's 202 lease deals in the first quarter were signed in March, after the war began.

Kelly said that if jet fuel prices stay at current levels for three to six months, airlines' profitability and balance sheets would come under pressure, potentially accelerating the retirement of older aircraft.

"In the scenario in which fuel costs remain elevated beyond six months, we would expect to see additional growth opportunities emerge for AerCap," he told an analyst call after the company beat first-quarter earnings expectations and raised its full-year outlook.

"In particular, it is likely that we'd see increased sale/leaseback opportunities as airlines look to fund growth while preserving cash and prioritising liquidity," he said, referring to airlines selling a plane or the purchase rights to a lessor and then leasing it back.

Asked whether customers had sought concessions to offset higher costs, Kelly said AerCap had not agreed to any material assistance. He added that requests could increase if fuel prices remain high and they would be considered on a case-by-case basis.

Kelly also said airlines able to reroute around the Gulf to connect Europe and Asia were the "winners" from the current disruption and were performing strongly, with demand for additional capacity.

"(But) I would never write off the Middle Eastern carriers, they will be back," he said.