Subprime Mortgage Aftershocks Affecting Airline Business?

The aftershocks of the subprime mortgage disaster may begin being felt in one industry that has nothing to do with residential real estate. According to a recent article in Forbes:

• "One place, it appears, is in the airline industry. Airlines and aircraft leasing companies have been quietly grounding plans to sell securities backed by airplane assets. In theory, aircraft-asset deals could provide diversification to a mortgage-dominated securitization market. But burned investors are "throwing the baby out with the bathwater," says Josh Rosner, managing director at Graham Fisher & Co. "Investors aren't indicting securitization, just the lack of transparency in how portfolio managers try to maximize their compensation by marking asset values with a huge amount of discretion,'' he adds. In other words, investors now realize they didn't know enough about what they were buying with mortgage-backed securities. So (justifiably or not) they've become wary of other types of asset securitizations too. This newfound skepticism comes at a bad time for U.S. airlines, which are currently flying the oldest fleets in history (13.3 years) and poised to buy thousands of new jets."

For more, see Aftershocks From The Subprime Quake.