Meet the Team: Florent Rigaud

We are very excited to welcome our new Paris team, as we have now been joined by partner Victoria Westcott and counsel Florent Rigaud, as well as senior associate Elaine Porter (joining shortly) and associate Abdullahi Mohammed.

This new team brings significant diversification to Reed Smith’s global asset finance capability, adding particular expertise in working with lessors to our existing strengths on the financing and airline sides. Our colleagues in Paris are currently the only English and French law qualified team practising in both the English and French languages, giving us a unique ability to serve our clients not only in the United Kingdom and Europe, but throughout the Francophone world.

Florent’s client base includes a number of operating lessors, and he has kindly agreed to be interviewed for our blog – we hope you enjoy! Continue Reading

Notes from a large island: Australia and its aircraft models

Australians are well known as keen travellers, and our geographical isolation has meant that air travel has long been a very important part of this aspect of our national identity. Perhaps unusually, this has grown into a strong local affinity for certain models of aircraft – especially the big ones. But is this set to change?

The Boeing 747, for example, has long held a special place in Australia’s heart. It was a 747 that set the then record for a flight carrying the largest number of passengers while evacuating 673 people from Darwin after Cyclone Tracy in 1974, it was the 747 called ‘City of Canberra’ that set the new commercial aircraft distance record in 1989 when it flew non-stop from London to Sydney, and it is a 747 immortalised by Paul Kelly in ‘Sydney from a 747’, still sometimes played while a flight circles the Harbour as it waits to land.

The current favourite is the A380, which was so quickly embraced and absorbed as part of our travelling lives. Its rock star status is such that Qantas have recognised that passengers may book particular flights just to fly in this model, with a section on its website headed ‘How do I book the Qantas A380?’ setting out the particular flight numbers and routes on which a passenger can be (almost) guaranteed to fly on one. It has become one of our familiar characters, and for a lot of expats the A380 is one of the important constants of our trips home. There is nothing like the feeling of stepping off QF2 in Sydney on Christmas morning – material worthy of the Qantas Christmas advert.

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The Transatlantic Battle

The Invasion of Low-Cost Airlines

The transatlantic market, typically the most lucrative aviation market in the world, is under attack.

Research carried out by Telegraph Travel in conjunction with OAG, the air travel analysts, has revealed the pressure being put on traditional carriers by low-cost, long-haul disrupters.

Telegraph Travel asked OAG to compare this winter’s transatlantic capacity with 2016/17. In terms of total seats on offer, British Airways remains the biggest player for flights between Europe and North America, but the low-cost airlines are closing in fast.

BA raised its available number of seats by 1.1%. Norwegian, on the other hand, raised its transatlantic capacity by 111.4%, whilst WOW Air has grown by 31.1%.

Other legacy carriers such as Delta, United Airlines and Lufthansa, the second, third and fourth biggest transatlantic airlines, are also treading water having increased capacity by just 3.2%, 2.6% and 2.9%, respectively. Meanwhile, Virgin Atlantic has cut its number of seats resulting in a drop of 3.2%.

Nevertheless, a few premium airlines are bucking the trend. Iberia and Aeroflot both increased capacity by more than a quarter this winter. In addition, Emirates added almost 50,000 transatlantic seats, driven largely by the introduction of flights from Italy and Greece to North America.

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Aviation’s gender pay gap

The gender pay gap has been an issue of much public discussion in the last year. The latest figures show that the overall national average for the pay gap between male and female full-time employees stands at 9.1%. However, the aviation sector is one which has seen particularly negative results.

With new rules regarding pay gap reporting in place and the April 2018 reporting deadline looming, this issue will not be going away – rather, it is likely to become more prominent as more results are published. For example, EasyJet’s announcement of its figures in late November generated a number of headlines, many of which summarised the results as ‘EasyJet admits 45% pay gap between women and men’.

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Farewell to 2017, and to the 747: An exciting year in review

What a year it has been! At the start of 2017, Reed Smith had no aviation finance team. We have now established teams in London, New York and Abu Dhabi (and we’re not done yet!). Across the board we have structured and closed a diverse range of transactions for lenders, lessors and operators alike (and we still have one or two to go as we all race for the finishing line that is the Holidays).

Throughout, we have been grateful for the support of our clients who have stood by us during our respective moves, and we are excited to close the book on the first phase of our project as we move into 2018. The new year will see the continued development of our practice and will, we hope, give us the opportunity to form deeper partnerships with our existing clients as well as to establish new partnerships to support additional players in the aviation industry.

Establishing a new practice from scratch is inevitably somewhat turbulent for all involved and this got us thinking about the other turbulence and interruptions experienced on a sectoral basis by the industry this year. With this in mind, it seemed like a good moment for us to pause and take stock of 2017. Continue Reading

An eye on the New Year

As we open our Advent Calendars each December, thoughts inevitably turn to Christmas, the New Year, and to what the next year will bring.

But this year we are also looking 12 months ahead to New Year 2019.

Why? Because January 2019 will see International Accounting Standard (IAS) 17 replaced by International Financial Reporting Standard (IFRS) 16.

Now accounting standards may not be the most festive or exciting of topics, and to many of our readers that may sound like an insignificant change. Indeed the legislators themselves have said that it should cause “only minor changes from the current standards”. However, the general consensus is that in the aviation industry, the effects may be more profound. Continue Reading

Aircraft lessor plans “airline-for-hire” service for its fleet of A380s

What to do if you are an aircraft leasing company struggling to lease your aircraft? For one lessor, Dublin-based Amedeo, the answer is to create its own “virtual airline”.

Amedeo has apparently been struggling to attract new lessees for its fleet of Airbus A380s – it currently has 12 under management and a further 20 on order.

They believe the best way to utilise the company’s assets is now no longer to just lease the aircraft to airlines but to operate them directly under what they believe could be a new model for air transport. Continue Reading

Asian lessors disrupt the worldwide aircraft leasing sector

The airline leasing sector has already had an incredibly busy year with major moves towards consolidation in the form of the purchase of lessor AWAS by DAE in April.

Leasing plays a significant role in the aviation sector as a whole – with leased aircraft estimated to account for 40-45% of new aircraft purchases. Consolidation is not the only factor driving change and shaking up the sector. Major players are increasingly noting competition from new Chinese entrants to the market. Many more have benefited from Chinese investment.

Chinese lessors are making real waves in the sale and leaseback market by the terms they can offer for new aircraft purchases. We know that the Chinese lessors we work with have ambitious plans, not least because of China’s huge domestic market (industry estimates put demand at around 6000 new aircraft over the next two decades).

What opportunities and challenges does this influx of new entrants pose for the aviation industry as a whole? Continue Reading

Airline Economics – Hong Kong

The Reed Smith aviation team have returned to their offices in London, New York and Hong Kong but memories of this year’s Airline Economics “Growth Frontiers” Hong Kong conference are still fresh in the memory (or as fresh as they can be with jet lag!).

Hong Kong’s Grand Hyatt was packed to the rafters with all of the leading industry stakeholders. Many of the key players we spoke to touched on recurring themes that seem to be the focus of the industry’s attention. For those of you who missed out (or who enjoyed the conference too much…) here our some of the Reed Smith team’s key take-away points, scribbled down on the long flight home.

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