At the start of what is anticipated to be another booming year for aircraft leasing, Willis Lease Finance Corp. (WLFC) recently announced an aircraft engine leasing partnership with Blackstone Credit & Insurance that anticipates deploying more than $1 billion over the next two years.
WLFC typically finances assets with 80% debt and 20% equity, according to Scott Flaherty, CFO of WLFC, and in deals stemming from the new partnership Blackstone is anticipated to provide much of the credit.
The asset-backed securities (ABS) markets were very active in 2025 with 15 deals totaling just over $10 billion of issuance.
"Historically, we've been limited from a growth perspective by our equity capital, so we see this partnership further driving our strategy to grow our portfolio and diversify our sources of funding," Flaherty said.
That strategy is likely to include ABS, of which WLFC has been a consistent issuer, closing its ninth ABS deal in December and an earlier one in June, for a total of nearly $1 billion, to take advantage of the market's anticipated growth.
"Morningstar DBRS views the global aircraft leasing sector's operating environment outlook for 2026 as favorable, underpinned by expectations for solid but moderating global economic growth, continuing sound demand for air travel, and a meaningful shortage of airworthy aircraft and engines relative to demand," the rating agency said in a December report.
Meeting financing needs
In terms of the ABS market, the rating agency said, aircraft lessors have significant financing requirements in 2026, including the financing of new aircraft deliveries as well as the refinancing of maturing debt.
"The asset-backed securities (ABS) markets were very active in 2025 with 15 deals totaling just over $10 billion of issuance," the rating agency said, adding that it expects the trend to continue in 2026, with lessors diversifying their funding while obtaining lower costs.
According to IBA, a provider of aviation intelligence and advisory, "This represents an 85% increase in issuance volume [over the year before], marking the strongest year since the 17-deal peak in 2019."
Tightening spreads over the last year has been one factor drawing issuers. Flaherty said the spread on the senior notes of December's $393 million deal had tightened to 155 bps, from 165 bps on June's $596 million deal.
Aircraft ABS spreads are likely to tighten even further given current dynamics. Morningstar DBRS noted that while Airbus and Boeing production rates are improving, it's insufficient to meet demand. In addition, ongoing issuers with some of the new technology are contributing to longer repair visits and grounding of the respective aircraft, factors driving demand for existing, in-fleet, older aircraft.
"We expect these trends will continue in 2026, underpinning both higher lease rates and aircraft values, which along with sound access to the capital markets should support solid aircraft lessor operating and financial performances, as well as their credit ratings," the rating agency said.
The perfect storm
Those dynamics are a boon for WLFC, Flaherty said, noting that the lessor holds more new engines in terms of value, but a larger number of current generation engines. The new-technology engines' "teething issues" have resulted in significant demand for functioning engines, and because delivery of new-tech engines has been slower than expected, demand for current-tech engines remains strong.
"So it's a bit of a perfect storm that's driving demand for both the current and new tech engines," Flaherty said.
New-technology engines' "teething issues" have resulted in significant demand for functioning engines.
That demand led to active ABS issuance from WLFC throughout 2025. WLFC's $392.9 million, Rule 144A offering closed in December comprised Series A and Series B notes issued from the Willis Engine Structured Trust IX. It was secured partly by the trust's direct and indirect interests in a portfolio of 46 aircraft engines and two airframes.
In June, additionally, WLFC closed a $596 million securitization, with coupons of 5.582% on the Series A notes, and 6.07% on the Series B notes, with expected maturities of six years. The earlier deal was secured on the trust's interests in a portfolio of 62 aircraft engines and two airframes.
