Avilease Aircraft Leasing

AviLease purchases 13 aircraft from Avolon

Aircraft leasing company, Avilease, wholly-owned by PIF, the Kingdom’s sovereign wealth fund, is a core element of Saudi Arabia’s expanding aviation ecosystem

Avilease, an aircraft leasing company, was launched in June 2022 to offer leasing, trading, and asset management services for the newest generation of aircraft. Wholly-owned by PIF, Saudi Arabia’s sovereign wealth fund, the company is a core element of the Kingdom’s emerging aviation ecosystem and central to developing a national aviation leasing value chain.

What is Avilease’s objective?

Targeting a 300 strong aircraft portfolio by 2030, Avilease is set to become a major force in the the development of Saudi Arabia’s aviation industry and knowledge economy as it builds local knowledge and expertise, enables the development of the Kingdom’s aviation infrastructure, and becomes a leading player in the national and global aircraft leasing market. In line with Vision2030, it will support Saudi Arabia’s ambitious efforts to support the national aviation strategy: increase passenger traffic to 330 million a year and connect Saudi Arabia with more than 250 destinations worldwide by 2030.

Managed by a highly experienced team, the company is growing its fleet of new generation narrow-body and wide-body aircraft from the world’s leading manufacturers acquiring assets via purchase-and-lease-back transactions, secondary portfolio acquisitions, direct orders from aircraft manufacturers, and corporate acquisitions.

To that end it has acquired 13 aircraft from Avolon, the Dublin-based global leader in aircraft leasing, including both narrow and widebody aircraft – seven A320neos, two A330neos and a Boeing 737 MAX 8 to reach a portfolio of 45 aircraft leased to airlines around the world. By diversifying both it’s asset portfolio and customer base, Avilease is building new relationships and opening up future growth opportunities.

Commenting on the deal, Fahad Al-Saif, AviLease chairman said, “AviLease embarked last year on its journey with ambitious aspirations to be a leading institution across the aviation leasing value chain, by establishing a diverse fleet of modern aircraft manufactured by leading global companies. The deal with the global leasing company, Avolon, is a true testament to our strength and unwavering purpose, and will provide us with further opportunities for direct expansion.”

If successful, a separate potential deal to acquire Standard Chartered Aviation Finance, which is being sold to reduce the parent’s costs and raise shareholder value, would catapult Avilease into the international aircraft leasing market, grow its portfolio by 120 aircraft which are leased to 30 airlines and expand its services to jet fuel hedging, debt financing and remarketing of unneeded planes.

High-profile, highly experienced management team

Leading Avilease is a veritable who’s who of aviation industry veterans Edward O’Byrne who has previously led Carlyle Aviation Partners and AerCap; David Power, former CEO of Orix Aviation and Alec Burger, former CEO of GECAS. Its advisors include Plane View Partners, co-founded by Henri Courpron, ex-CEO of International Lease Finance Corporation.

What does that mean for the global aircraft leasing industry?

A lot of competition and a lot of disruption. Along with Saudi Arabia, India too has its eye on breaking into the top ten tier of aircraft leasing companies – currently home to global leaders such as AerCap, SMBC Aviation, AirLease Corporation and Avolon – and entering the US$170 billion aircraft leasing business. Unlike India’s nascent aircraft lessors however, Avilease, given its lineage, can depend on strong financial support and the liquidity it needs to build up its portfolio quickly and efficiently. This is similar to the workings of the industry in other global hubs such as Singapore, where aircraft leasing companies are supported by Temasek, also a sovereign wealth fund; Dublin, backed by European banks and China, where the industry has the backing of national financial institutions.

Case in point was the news in June 2023 that the newly-minted lessor has secured a US$1.1 billion unsecured five-year loan consisting of two tranches worth U$850million and a shariah-compliant US$250 million. The deal, supported by national and international banks, was 3.3 times oversubscribed and is testimony to investor confidence in the company’s future.

In view of the continuing shortage of new aircraft deliveries as OEMs in turn struggle with a shortage of parts and labour and supply chain glitches, the leasing industry will continue to see strong global demand as airlines turn to leasing companies instead of OEMs to fulfil demand.


 


 

 

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