Avolon Holdings Ltd.

The stable rating outlook on Avolon reflects our expectation that the company's earnings and cash flow will continue to benefit from the growth of its aircraft fleet and strong demand for aircraft due to the rising volume of global passenger traffic. We expect the company's EBIT interest coverage to be in the mid-1x area and its funds from operations (FFO)-to-debt ratio to be 9%-10% through 2020. We could lower our rating on Avolon over the next two years if its EBIT interest coverage declined below 1.3x or its FFO-to-debt ratio declined below 7% for a sustained period. This could be caused by reduced aircraft lease rates due to weaker-than-expected demand and overcapacity or if Avolon adopted a materially more aggressive

...Avolon has a fleet of 481 aircraft, mostly modern, widely- used models, positioning it as the world's third-largest provider of aircraft operating leases. The average fleet age is a relatively young 4.9 years, with an average lease term of seven years and a well-diversified customer base, both in line with those of other investment-grade aircraft lessors. It also has an order book for 393 aircraft, primarily widely used narrowbodies such as the A320 and B737. These aircraft are easier to place with new airlines if existing customers default and turn back planes....

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