Aviation Finance
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Developments

SMBC AC issues $500m senior notes, reveals operating profit of $530 million
July 20th 2016: SMBC Aviation Capital has closed its long-awaited $500 million senior unsecured notes offering and disclosed selected financial results for the first time. These show that in the year to end March 2016 it made an operating profit of $530 million, up 22 per cent on the preceding financial year, on revenues of $1,046 billion, up 15 per cent year-on-year.


The July 14th edition of Aviation Finance is published
July 14th 2016: In the latest issue of Aviation Finance: - Asia, technology and weak demand are Farnborough themes; Aviation's public equity markets after 'Brexit'; Perspectives Embraer's Commercial CEO on the story of the newly launched E2; India's new Commercial Aviation Policy dissected; An idea for the MOM market - a B575MAX; Avolon acquires 45 aircraft from GECAS; COMAC's order; China lessor IPOs - struggling so far; Freight Market Overview.

 

Perspectives

Lessor ROIs to fall

Mark Lapidus, CEO of Amedeo, says that while the future of aircraft leasing is bright the inflow of equity capital into the industry is likely to drive down returns from their current high levels.
Stellwagen's Millar on alternative financing for airlines
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
See the Aviation Finance Perspectives Series here.

Analysis

Chinese lessor IPOs struggle
July 14th 2016: Two Chinese lessor IPOs completed in the past two months are struggling to perform on the Hong Kong stockmarket. BOC Aviation has dropped from HK$42 on its debut in early June to HK$38.6 at the time of writing. CDB Leasing, which was priced at HK$2, fell 7 per cent to HK$1.86 on its first day of trading on July 11th.


The June 30th edition of Aviation Finance
June 30th 2016: Aviation Finance latest issue: Brexit's reverberations through the aviation financing complex; Amedeo's CEO on legitimate current aviation ROI expectations; CIT bidding battle goes to the next round; Stephen Udvar Hazy's milestone; Nordic sees E190 supply situation as continuing buying opportunity; Goshawk, Aircastle close new credit facilities; Aergen's debut ABS issuance; India and Brazil further liberalise airline ownership rules; European airline share prices hammered in wake of Brexit; CBD 'cornerstone' approach to IPO sets price at bottom end of expectations.


USD currency 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 aviation 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.

 

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Aviation Finance Special Features

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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).


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.


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.

 

Analysis

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.


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..