HSH Nordbank sees renewed uptrend for the aviation market

Hamburg/Kiel, May 2, 2010 - HSH Nordbank expects the aviation sector to continue to recover. The initial trends towards recovery, which are also having a positive impact on the financial services sector, were already observed at the end of the second half of 2009.

"The demand for aircraft finance remains high", said Angela Behrend-Görnemann, Head of Transportation Finance at HSH Nordbank, to journalists in Hamburg at the weekend. Boeing and Airbus alone plan to deliver more than 900 aircraft in 2010. Altogether, aircraft worth some USD 62 billion are to be delivered in 2010 "We expect between USD 16 and 18 billion to be financed by banks" said Ms. Behrend-Görnemann. "HSH Nordbank will also be moderately increasing new business in the area of aircraft finance again in fiscal 2010", was her forecast.

HSH Nordbank's expectations for the market are supported by the international aviation association IATA, which projects a 5.6 percent increase in the number of passengers for 2010. Air cargo is even expected to increase by as much as 12 percent.

Ms. Behrend-Görnemann said that she was satisfied with the way the sector handled the consequences of the financial crisis last year. "Aviation market players reacted very flexibly throughout the crisis year of 2009“, she added. “Manufacturers had cut production and postponed deliveries.” Airlines improved the efficiency of their fleets by especially storing less efficient aircraft.

Although Ms. Behrend-Görnemann regarded the temporary effect of the recent flight ban resulting from the cloud of volcanic ash from Iceland as drastic for the airlines, she believed that the long-term impact would be limited. "For the European airlines the effects can be compared with those of a strike. It is a relief for all those involved that after resumption of flights there were no substantial changes in passengers' flying activities. This means that the economic consequences of the cloud of volcanic ash will be much less severe than other major events in aviation", said Ms. Behrend-Görnemann.

Together with Infrastructure and Rail Finance, Aviation belongs to HSH Nordbank's Transportation division, where the Bank employs more than 100 sector specialists around the world, of whom more than 60 are located in Hamburg and Schleswig-Holstein. The Aviation unit offers finance and asset management services to airlines, leasing companies and manufacturers. As per 31 December 2009 the Bank had a loan volume of EUR 6.6 billion in the area of aircraft finance, spread over roughly 750 aircraft.

Next to Seattle and Toulouse, the metropolitan region of Hamburg is one of the world's leading locations for civil aviation. Some 36,000 employees contribute their know-how not only to the big players, Airbus Deutschland, Lufthansa Technik and Hamburg Airport, but also to the more than 300 SMEs amongst aircraft component suppliers. "The Hamburg aircraft cluster has made a name for itself as an international competence centre, especially in the area of aircraft construction, cabin construction and cabin systems. In addition to this, the cluster offers a range of services along the entire civil aircraft value chain“, said Ms. Behrend-Görnemann, underlining the importance of Hamburg as an aviation hub.