Aviation Finance

Developments

In the latest edition (September 2nd): Capital and credit markets continue to revive as Goshawk taps the USPP market and BOC agrees $935 facilities
September 2nd 2021: The continued buoyancy of credit and capital markets for aviation funding remains in evidence. Goshawk raised over $200 million on the US Private Placement market in a landmark transaction while BOC Aviation has agreed two upsized unsecured syndicated credit facilities amounting to $935 million. In this issue we also report on a strong pick up in orders and potential orders for Airbus and Boeing.


In the latest edition (August 19th): Growing confidence in aviation ecosystem
August 19th 2021: Taken together, many of the stories in this issue reflect the growing confidence emerging across the aviation ecostructure. Latest data from Eurocontrol shows traffic is now in line with the most optimistic scenario it published at the beginning of June. The successful IPO of electric air taxi developer JOBY, Breeze Airways raising of $200 million in a funding round led by BlackRock and Knighthead Capital Management, and the exceptional pricing of ALC’s public offering of $600 million three year unsecured notes at 0.80 per cent and $500 million seven year notes at 2.10 per cent all demonstrate that the appetites of serious investors for aviation exposure has yet to be sated.

 

Perspectives

Aercap approves the acquisition of GECAS

At its Annual General Meeting held on May 12th shareholders in AerCap Holdings NV approved the acquisition of GE Capital Aviation Services.




Anton Tams, GECAS on electronic maintenance records

Trevor Ricards, GECAS on ABS
DVB's Kieran O'Keefe on the lease rate factor (LRF)
IBA's Dr Stuart Hatcher on lease rates

Analysis

In the August 5th edition: Lessors: 'inflection point' has passed as cash flows recover
August 5th 2021: The mood of renewed optimism in the aviation finance sector is palpable. AerCap’s Aengus Kelly, Avolon’s Domhnal Slattery and DAE Capital’s Firoz Tarapore all report significant progress, especially in terms of cashflows and confidence about the recovery now underway – albeit with understandable degrees of caution. IBA’s Phil Seymour, too, is impressed by the performance of the industry, saying ‘hats off’ to participants in the ABS market for making investors feel confident. The range of new aircraft orders now being placed or contemplated, too, also reflects an industry coming up for air.

In the July 22nd edition: Private equity's march continues
July 22nd 2021: While there has been a waning in the appetite of some bankers for debt financing in the aircraft space, PE has shown a growing hunger for this opportunity, as reflected in this issue. Castlelake features strongly as a provider of finance and a provider of investment opportunities. There is also continuing evidence of strong interest in fleet modernisation by major carriers, not all involving brand new aircraft.


In the July 8th edition: evidence of longer-term confidence in the industry
July 8th 2021: In this issue we review business updates for Q2 for three of the largest aircraft large lessors. It shows that they remain extremely busy in terms of their transactional activity, continuing to execute new lease agreements and actively buying and selling aircraft. United orders 270 planes; BOC Aviation profit warning; Investors warm to Icelandic airlines; Korean merger gets green light; Plans for new Saudi national carrier confirmed; Air France-KLM raises €800m; Blackbird Capital II closes; CDB Aviation acquires Max 8s from DAE; Lessor deliveries; Flannery appointed CCO at SMBC Aviation Capital.

 

Aircraft Leasing & Lessors

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Aircraft & Airlines

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In the June 24th edition: Bulls in sight
June 24th 2021: Although IATA data still reveals the disparate experience of recovery by carriers, evidence that investors are confident about the long-term future remains strong. In this issue we talk to SMBC Aviation Capital’s CFO about his latest 7-8 times oversubscribed $500m note issue, note the return of serial issuer ALC to the ABS market, KKR’s acquisition of an $800m loan portfolio from CIT and Avolon’s order for up to 500 electric aircraft. We also talk to ABL Aviation CEO Ali Ben Lmadani and CCO Michael Weiss about why they are enthusiastic about the potential for returns in mid-life vintage assets.


In the June 10th edition: The patterns of reconstruction start to make themselves evident
June 10th 2021: More ABS activity, and the signs of recovery, notably in the new orders area show signs of the pattern of the recovery, or, more accurately described, reconstruction effort, after Covid. The recovery in the global airline system is being led as North America shows the strongest signs of rtecovery, while other regions, such as South East Asia remain slow to show signs of pick-up; Is the clock ticking for Power by the Hour (PBH) deals? Peter Aldis, Senior Asset Manager at IBA, considers the likely outcome; Muzinich & Co has raised an initial $300 million seed capital from European institutional investors for its Aviation Senior Secured Strategy aircraft debt financing fund; United my be set to boost Boeing’s order book further for a large narrow-body aircraft order that could include at least 100 Boeing 737 MAX 8s.


In the May 27th edition: shoots of recovery
May 27th 2021: IATA is now forecasting that traffic levels will increase to 88 per cent of their 2019 pre-Covid levels and to 105 per cent the following year; Moody’s Snr. VP Mark Wasden now expects the recovery in air travel will propel lessors’ profitability higher by 2023; Air Lease Corp prices $1.2 billion Senior Notes; Ryanair issues €1.2bn 5-year Eurobond; PE jv acquires NAB $1.1bn loan portfolio; Apollo & Merx in sale & leaseback with Air France; AeroCentury makes Q1 loss; Fitch stays ‘negative’ on aircraft ABS; GECAS leases more 737-800 BCFs to ATRAN; First European operator of B737-800SF; ST Engineering to lease A321P2Fs to GlobalX; Aircastle delivers Embraer 195 to KLM; Sirius acquires five planes from BOC.

 

Analysis

In the May 13th edition: recovery signs continue to manifest themselves
May 13th 2021: Gradual recovery in passenger traffic and continued strength in cargo is continuing to provide a backdrop for investor appetite for aviation assets, as other capital market transactions revive. The improvement in sentiment is spilling over, too, into order books of airframe manufacturers, albeit slowly, indicating that supply of aircraft assets will lag demand on the way out of the pandemic recovery. Airbus has reported good improvement in both its deliveries and orders for April this year. But even though it was the third consecutive month of order expansion for Boeing, with 17 deliveries and 25 gross orders, allowing for cancellations and conversions Boeing booked just eight net aircraft orders. It also only delivered four 737 MAX jets in April – down from 19 the previous month – after it halted deliveries due to the discovery of a new electrical problem.


In the April 29th edition: recovery signs
April 29th 2021: In its third tapping of the US market so far this year BOC Aviation raises $750m. Falko's first ABS secured with regional aircraft assets post pandemic; Boeing CEO David Calhoun predicts that 2021 ‘will be a turning point as more people are vaccinated and travel again’; Avolon incurs Q1 loss, sees ‘recovery firmly underway’ ; Virgin Australia to take back 10 leased B737-800s; DAE orders 15 Boeing 737 MAX jets; IndiGo closes sale/leaseback deals on 17 aircraft with GECAS and SKY; EU approves €462 million support for TAP.


GECAS arranges Purchase Leaseback Agreements with IndiGo for 14 Airbus Neos
April 22, 2021, Shannon Ireland: GE Capital Aviation Services (GECAS) along with the ventures it services have agreed a Purchase/Leaseback (PLB) arrangement for 14 LEAP-powered Airbus neo aircraft with IndiGo. The seven A320neo and seven A321neo are scheduled to deliver between the fourth quarter of 2021 and the middle of 2022.


In the April 15th edition: a positive frame of mind
April 15th 2021: BOC Aviation is in the process of tapping the US capital market under its Global Medium Term Note Programme; There are ‘lots of reasons to be bullish on domestic leisure travel' transport consultants at Oliver Wyman say, and, more good news: Southwest Airlines has recalled all flight attendants from long-term voluntary leave to cope with a domestic recovery, now progressing faster than expected, while the share prices of European airlines have risen 57 per cent and US airlines by 65 per cent since last November.


In the April 1st edition: further evidence of a new springtime optimism
In the April 1st 2021 edition: We explore how well ABS transactions have done, in relative terms, over the past six to nine months, why regional aircraft operators and lessors may be in the vanguard of recovery, the progress being made by Boeing with the return of the MAX and the trend towards further consolidation amongst lessors: The Carlyle Aviation Partners acquisition of Fly Leasing for $520m: Traffic recovers in Europe, but LCCs still sharply curtailed: AerCap Dreamliners for Norse Atlantic; American repays US Treasury Cares Act loan.


In the March 18th edition: Aercap's acquisition of GECAS - a ‘once in a lifetime opportunity'
In the March 18th 2021 edition: The deal between GE and AerCap creates an industry leader across all areas of aviation leasing, encompassing passenger and freight aircraft, engines and helicopters. While aircraft leasing will be by far the largest component in this much enlarged business, the added diversity of revenue streams and customer touch points from the new business units will benefit the whole. That it also has been engineered by an 'Exchange- Traded lessor' helps balance the flightpath of global aviation financing. As this issue also reveals in other stories, there is strong evidence that the tide is turning in relation to the impact of the pandemic. IPOs by three LCCs is one example of this. Sun Country Airlines saw its shares rise by 51 per cent on its debut; Norwegian start-up Flyr raised $70 million with an IPO in Oslo and Frontier Airlines, a carrier acquired by US investment group Indigo in 2013, has also filed for an IPO.