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Developments

USD currrency movements - a key short term indicator of the impact of 'Brexit' on the UK and eurozone aviation finance sectors
June 24th 2016: Sterling dropped by as much as 11% compared with its pre poll level, as the Brexit vote became evident overnight, but recovered to a net fall of c.7% off following the Bank of England's announcement of a £250bn intervention fund to calm markets. The selloff is a measure of the economic impact of the vote*, on aircraft financing ultimately in sterling, but another aspect is the impact on euro sources, as the euro has fallen also, but by a lesser amount against the US dollar than the pound. After an initial tumble of c.8%, the euro recovered along with the pound to trade c 5% off.

Embraer appoints John Slattery as President and CEO of Commercial Aviation
June 22nd 2016: Embraer has appointed its Chief Commercial Office, John Slattery, as its new President and CEO for its Commercial Aviation business unit. Since November 2012, Slattery has been the business unit's Chief Commercial Officer. Slattery, who was formerly head of RBS Aviation Capital for the Americas takes up the new role in July.

 

Perspectives

'Operating Lease Killer'

Howard Millar, the new CEO at Stellwagen Capital explains his company's offering for airlines that aims to shakeup the aircraft financing market.
NAC's Overgaard on the RJ market
Morgan on private EETCs
Aerolease's Jep Thornton on its MRJ deal
Avolon's Slattery on lessor M&As in 2016
Aviation thought leaders on the Outlook for 2016
Transportation Partners' Duffy: the airline-lessor model
See the Aviation Finance Perspectives Series here.

Analysis

The June 16th edition of Aviation Finance is published
June 16th 2016: Aviation Finance latest issue: Investor appetite for private deals remains strong according to Burnham Sterling's chief; NAC's CEO on their second large transaction with ALC, this time for Embraer E jets; Debt Capital Markets: SMBC Aviation Capital to make debut issuance; Bombardier's C Series reaches new milestone as Russian OEM Irkut unveils the MC-21; Boeing closes on Iran order for about 100 aircraft; New Indian aviation policy approval could open a new growth frontier for air travel that could challenge China in scale.


Delta Airlines and Burnham Sterling close $450 million in private placements, reaching over $1 billion in total transactions
June 8th 2016: Greenwich, Connecticut-based Burnham Sterling & Co. LLC (Burnham Sterling), the financial advisor specializing in asset financing, announced that it closed a $450 million private placement for the world’s second largest airline, Delta Air Lines (NYSE: DAL). Burnham Sterling and affiliates have now financed 48 mainline aircraft and raised over $1 billion in private placement transactions directly for Delta.


BOC Aviation IPO could pave way for other Asia lessor IPOs
The take private of Avolon by Bohai Leasing earlier in 2016, shrunk the universe of publicly listed pure play lessors back but with the upcoming IPO of BOC Aviation, the visibility and appeal of aircraft assets to investors should improve. BOC Aviation, aircraft leasing unit of Bank of China, is arranging an IPO currently, which has attracted China’s sovereign wealth fund and Boeing as anchor investors. A successful IPO on the Hong Kong Stock Exchange, set for 1st June, could also pave the way for other large Asian lessors to follow suit.

 

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Aviation Finance Special Features

Aviation Finance special features


Aercap completes 131 aircraft transactions in Q1, set to make first debt issuance of 2016
AerCap's highlights from its first quarter results include fleet utilisation rate of 99.3%; average remaining lease term of 6.1 years and a debt to equity ratio of 2.8x. In the quarter AerCap completed 131 aircraft transactions of which 36 were widebodies. The lessor has also just priced a $1 billion senior unsecured debt issuance, its first debt issuance of 2016.


Fitch assigns A rating to Boeing $1 billion note issuance
Fitch Ratings has assigned 'A' long-term ratings to Boeing Company's (BA) issuance of $1 billion senior unsecured notes. The notes will be issued in three parts, with maturities of 2023, 2026, and 2046, and the proceeds to be used for general corporate purposes.


IATA data shows passenger traffic up 7% in Q1 - but growth rate easing
Although global passenger traffic in the first quarter of 2016 started strongly, up 7.0 per cent on the same period a year earlier, or by about 6.0 per cent after accounting for the extra leap day, the growth in March (+5.3 per cent) was the slowest growth since June last year, according to IATA.

 

Analysis

Afreximbank creates $20bn fund to support Africa's airlines
A sizeable new loan fund to help revive Africa's currency-exposed airlines has been established by the African Export-Import Bank, which is also exploring the possibility of creating a new regionally focused leasing platform. Aviation Finance reports on an address last week by Afreximbank Senior Manager, Samuel Mugoya in which he highlights some of the challenges faced by airlines on the continent and also some of the opportunities for growth, particularly in intra-regional services.

The May 5th edition of Aviation Finance is published
May 5th 2016: Aviation Finance latest issue: we speak with Citi's Tom Hollahan, Munawar Noorani and Louise O'Mara on the aircraft financing environment; New technology creating new routes - how Norwegian's plan to leverage new technology narrowbodies could shake up the transatlantic market; Analysis: the air freight market in 2016; Aircastle set up to acquire more mid life aircraft; FLY reports net income increase following accounting change; American and Norwegian set to issue EETCs; GOL's exchange offer; Avolon fleet size jumps, delivers first NEO to Indigo; Analysis: Blade downgraded.

FLY reports net income increase of more than $20 million as a result of SEC-mandated accounting policy changes
May 2nd 2016: SEC mandated changes to FLY Leasing's accounting policy for maintenance rights has seen the aircraft lessor restate its financial statements for fiscal years 2014 and 2013, and include it in its 2015 results. The changes see FLY report increased net income of $21.8 million per cent for the three years with no material impact on the company's reported cash flow for the periods covered.

Avolon's fleet increases as HKAC comes under its wing
April 29th 2016: Avolon's owned, managed and committed fleet has grown to 402 aircraft following the acquisition of the lessor by China's Bohai Capital. Avolon's fleet includes the fleet of Hong Kong Aviation Capital, a leasing business of Bohai Capital, that is now managed under the Avolon brand, as well as other aviation assets. The lessor has also reported a $3 billion war chest as it look to accelerate growth in 2016 and beyond..

Delta order a major boost for Bombardier's C Series
April 28th 2016: Delta have become the first of the major US carriers to commit to Bombardier's all new technology narrowbody C Series aircraft. In addition to securing their first major carrier order in the world's largest aviation market, the order, for at least 70 aircraft (and up to 125 aircraft), sees the Canadian OEM reach its target of 300 firm orders prior to the C Series entry into service later this year. The order is also the largest in Bombardier's corporate history.

FLY Leasing net income up in Q4 2015
March 8th 2016: FLY Leasing has reported net income for Q4 2015 of $27.7 million, or $0.68 per diluted share, against a net income of $15.5 million, or $0.37 per diluted share, in the same period 2014. 'FLY has completed a major transformation and enters 2016 with a leaner, younger and more profitable fleet, and poised for intelligent growth,' said FLY's CEO Colm Barrington. During the quarter the lessor completed its $100 million share repurchase programme and approved an additional $30 million programme.