Financing

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Navigating successful exits in investments is a strategic endeavour that requires planning, and adaptability to market conditions. This is the case across industries, including the aviation space. As market conditions and investment landscapes evolve, firms and asset owners in this space are increasingly exploring alternative exit strategies to maximise returns and mitigate risks.

Traditional Exit

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Where some countries have, and successfully at that, positioned themselves as aviation finance hubs by setting a lower corporate tax rate, others, like France, take advantage of their higher taxation environment to offer a very competitive and advantageous financing product, the tax lease. Tax leases in France are used on a variety of assets, including…

The successful issuance last year by Ashland Place Finance of ASHLAND 2023-1, the aviation loan asset backed securitization (ABS), together with the engine ABS, WEST VII, issued by Willis gave glimmers of hope to aircraft lease ABS market participants. This year’s BJETS 2024-1 by Global Jet Capital marks a further significant development for the aviation…

From time-to-time, transactions or scenarios occur that require consideration of whether an operating lease or a finance lease is the best way forward for parties involved. Whilst their structures are similar, there continue to be key differences in how operating and finance leases are structured and function. …
Continue Reading Operating lease and finance lease – the key differences

Today, some commentators have even argued that autonomous flight is likely to become a reality much earlier than autonomous driving. However, a distinct issue is the extent to which artificial intelligence (AI) may be used in autonomous flight.
Continue Reading Legal challenges in autonomous flight: Things to consider before investing in an aircraft that flies itself

As with the rest of the world, the Covid-19 pandemic has not been kind to African aviation industry stakeholders. To paint a broad picture of market performance, the African Airlines Association’s (AFRAA) recent report noted a 50% drop in capacity since April 2019 with the continent facing greater declines in 2020 in passenger numbers, seats offered and aviation-related jobs than the worldwide average[1]. The continent also faces the twin challenges of limited financing options and difficulties with current policies. However, despite these challenges, there are positive aspects to the market’s recovery and opportunities for sustainable growth. There are several initiatives available to market participants and governments to counter the difficulties in the current operating environment, if these are adopted. Opportunities also abound in this unsaturated market for regional growth and in air cargo.
Continue Reading Supporting the African aviation market to recovery

In an article a few weeks ago on ‘How tech went big on green energy’, the Financial Times referred to a report released in February by Lancaster University and Small World Consulting, which found that the information and communication technology sector (i.e. IT)  ‘is estimated to form ca. 1.8-2.8% of global GHG emissions in 2020’[1]. That, the FT noted, ‘is roughly the same as emissions from the aviation sector’[2].
Continue Reading Greening pains: How are we going to finance sustainable aviation fuel?

Aviation was exceptionally – and often uncomfortably – visible to the public eye over the course of 2019. The powerful combination of the grounding of the 737 MAX fleet as a result of tragedies and the advancing ‘flygskam’ (‘flight shame’) movement had influenced the global conversation to a significant extent by the middle of the year, which was then compounded by various airline insolvencies and an announcement from a British political party as part of an election campaign that it would investigate a complete ban on private jets from 2025.

As an asset class and as an industry, aviation has been attractive to investors for some time now, as its relative youth as a market compared to its peers and the reliability of its returns have drawn funds from all over the world. Recently, however, it has seemed that some of the features of the market we have come to take for granted have been evolving. For example, the words ‘long haul’ now bring to mind an image of the two-engined 787 Dreamliner, rather than its four-engined predecessors. The famed “double digit” returns for investors may be easing (with IATA reporting a 5.7 per cent ROI for the end of 2019)[1], investments once considered “platinum” are now being sent for part-out, reports of ‘trade wars’ are developing on a weekly basis and we appear to be coming to the end of the era of low interest rates and oil prices.

However, we are also seeing increasing attention from new investors and ever-growing passenger demand figures which, together with the evolutions noted above, indicate a maturing market with a new set of trends being observed by aviation financiers.
Continue Reading The eye of the beholder: After a dramatic year in aviation, how is the industry perceived by investors?

At the end of last year I wrote a published piece entitled “The Allure of Investing in Aviation”. A client asked me this week whether, a year later, I stood by what I’d written.

To answer that, you have to decide whether or not you think 2018 was a good year for the airline industry as a whole. There were many highs, but some telling lows as well. There can be no doubt that we are still in a ‘supercycle’ of sorts, but this has to be balanced against both macro and sectoral environmental conditions.

The expectations as we headed into 2018 were that profitability would improve over the year, with 56 per cent of airline CEOs in a positive mood[1]. However, this positivity has to be tempered by IATA’s adjustment of its own profit forecast from US$38.4 billion in December 2017 down to US$33.8 billion by June last year[2].

So what should investors be looking at? Is aviation still an attractive investment?Continue Reading Elusive, yet still alluring: What did 2018 show us about investment in aviation?