Aergo's debut securitisation; Amedeo Air Four Plus' second placing
SMBC H1 pre-tax profits rise 3.1% to $167 million; Aergo Capital prices inaugural aircraft portfolio transaction; Second placing for Amedeo Air Four Plus; Natixis signs MOU with Minsheng; Norwegian profits beat expectations; World Airways to relaunch with Dreamliner fleet; CDB finalises order for 70 Boeing aircraft; BOC Aviation in three aircraft deal with Qatar Airways.

SMBC H1 pre-tax profits rise 3.1% to $167 million
SMBC Aviation Capital made a profit before tax of $167 million in the six months to end September 2017, up 3.1 per cent over the same period last year, on revenue and other operating income of $566 million.

The company said in a statement that it had enjoyed another period of strong profitability, driven by its core leasing business and robust demand fuelling aircraft trading activity.

At the end of September it had aircraft assets under operating leases of $10.5 billion, comprising 278 owned and 174 managed aircraft. During the six months it took delivery of seven new aircraft, six of which were new technology A320neo and A350 aircraft. SMBC Aviation Capital says that 14 per cent of its portfolio is now comprised of newest technology A320neo, A350 and B787 aircraft.

During the period the lessor sold 13 owned aircraft with an average age of 7.5 years and entrered into sale agreements or signed letters of intent signed for the sale of a further 38 aircraft, including the previously announced sale of a portfolio of 20 aircraft to Aircastle.

Commenting on the results, Peter Barrett, CEO of SMBC Aviation Capital, said the firm had again seen significant activity in its trading business and had taken advantage of the increased demand for good quality assets to selectively trade aircraft, in line with its strategy of trading through the cycle."

Earlier this month SMBC AC's two shareholders announced plans to inject a $1 billion capital into the company by 31 March 2019, which is in addition to the $500 million it raised last July under its bond programme and likely future issuances.

Sumitomo Mitsui Financial Group and Sumitomo Corporation have agreed to privide the additional equity to support SMBC Aviation Capital’s growth plans, including the funding of new aircraft coming on stream from 2019, and "will ensure that the company can continue to offer its customers innovative aircraft financing solutions to meet their fleet requirements."

In conjunction with this, the shareholders have also agreed that the primary leasing vehicle between both companies, Sumitomo Mitsui Finance and Leasing Company, Ltd. (“SMFL”), will become a 50:50 joint venture - against the previous 60/40 arrangement.

In a statement SMBC Aviation Capital said the restructuring reaffirms SMFG’s and Sumitomo Corp’s commitment to te aircraft leasing company "while also enabling both parties to realise a material increase in the competitiveness and growth of their strategic joint operating partnership".

Commenting on the capital injection and restructuring of the shareholding, Barrett observed that in addition to supporting its growth plans, the move "also further enhances our integration with our shareholder - a key differentiator for us in this industry.”

The restructuring agreed between SMFG and Sumitomo Corp will be effective by March 31st 2019, subject to obtaining approval by relevant foreign and Japanese domestic authorities.

Aergo Capital prices inaugural aircraft portfolio transaction, ‘METAL 2017-1’
Aergo Capital has announced the issuance of $584.839 million of secured notes by METAL 2017-1 Limited (aka METAL Cayman) and METAL 2017-1 USA LLC (aka METAL USA). Together METAL Cayman and METAL USA expect to use the proceeds to acquire a portfolio of 26 aircraft with an appraised value of approximately $690 million from Aergo, which will in turn use such proceeds to refinance existing loans. Aergo Capital Limited will act as servicer for the aircraft portfolio.

The offering consists of four tranches of Notes: $430.028 million of Series A Notes with a coupon of 4.581per cent at par, $86.006 million of Series B Notes with a 6.5 per cent coupon at 98.46 per cent price, $55.044 million of Series C-1 Notes and $13.761 million of Series C-2 Notes with coupons of 8.0 per cent and 9.75 per cent respectively and prices of 98.62 per cent and 99.56 per cent respectively. The Series A Notes have an initial LTV of 62.5 per cent, the Series B Notes have an initial LTV of 75 per cent, and the Series C-1 and C-2 Notes have initial LTV’s of 83 per cent and 85% per cent respectively. Goldman Sachs & Co. LLC was Sole Structuring Agent, Global Coordinator and Bookrunner.

Aergo has also announced the acquisition of two 737-800s, one A321-200, and one A330-200 aircraft from an unidentified major lessor. All four aircraft are on long term operating leases and this acquisition brings Aergo Capital’s fleet to 41 aircraft. The acquired portfolio consists of one 2015-vintage 737-800 on lease to Lucky Air, one 2001-vintage 737-800 on lease to Sun Country Airlines, one 2004-vintage A321-200 aircraft on lease to Smartlynx Estonia, and one 2007-vintage A330-200 on lease to Shaheen Air in Pakistan.

Aergo Capital’s CEO Fred Browne said, “This acquisition is a continuation of our strategy of acquiring younger aircraft on long term lease and trading out of older, classic aircraft. We look forward to working with several new lessees in addition to Smartlynx with whom we already have a strong partnership”.

A&L Goodbody acted as lead transaction counsel for Aergo Capital and KPMG acted as tax and accounting adviser. Smith Gambrell & Russell acted as NY counsel for Aergo Capital.

Second placing for Amedeo Air Four Plus
Amedeo Air Four Plus (AA4+) has launched a second placing to acquire a fourth Airbus A350-900. The company intends to issue new shares and to use the net placing proceeds of approximately GBP43 million, with the shares issued at a price of 104.00 pence per share, alongside debt financing to acquire the aircraft which will leased to Thai Airways on a fully repairing and insuring basis for a fixed 12 year term. AA4+ expects to take delivery before the end of next January.

Last June Amedeo raised GBP140 million after placing 134.7 million shares at a price of 104.00 pence to purchase the three initial A350-900 purchases.

AA4+ currently owns eight Airbus A380-800 aircraft, six of which have been leased to Emirates Airlines and two of to Etihad Airways; two Boeing 777-300ER, both of which have been leased to Emirates Airlines; and three Airbus A350-900, all of which are on lease to Thai Airways.

AA4+ says the increase in the size of the company is expected to improve liquidity and enhance the marketability of the company, resulting in a broader investor base which should enable it to grow further, thereby spreading fixed costs over a larger capital base.

AA4+ expects the new shares to be admitted to trading on the Specialist Fund Segment of the London Stock Exchange's main market for listed securities around the end of November 2017. The new shares will rank pari passu with existing shares, including as to dividends.

Alongside the second placing, Amedeo Capital intends to sell 14,074,995 of its shares. Amedeo Capital currently owns 15,074,995 Shares, which were funded by its major shareholder, Pine Brook Capital Partners. As part of the management buyout of Pine Brook by Amedeo management, Amedeo Capital will dispose of these shares and Amedeo management will increase their indirect investment to 1,000,000 Shares retained by Amedeo Capital. The Amedeo Share Sale will not form part of the Second Placing. However, Nimrod Capital will seek buyers for 14,074,995 Shares in the secondary market simultaneous with the second placing at approximately the same price of 104 pence per Share.

Natixis signs MOU with Minsheng
Natixis has signed an MoU with Minsheng Financial Leasing, a majority-owned subsidiary of China Minsheng Bank, for the financing of a fleet of Boeing aircraft to be acquired by MSFL.

Under the agreement, Natixis will provide MSFL with financial support for pre-delivery payments and the long-term funding of 30 Boeing 737 Max8 aircraft and arrange a warehouse facility to facilitate the fleet management of MSFL. The bank will also support MSFL in arranging approximately US$2.2 billion of funding to support the growth of its commercial aircraft leasing platform, set up a Euro medium-term note programme for MSFL and offer its expertise, including ratings advisory, capital structuring, documentation and marketing and distribution outside of China of the instruments issued under the programme.

MSFL will also draw upon Natixis’ expertise in green financing to establish a Green Bond framework for MSFL and identify investment opportunities in Europe and in the US across various asset classes that fit MSFL’s risk-return profile.

Norwegian beats expectations
Norwegian Air Shuttle posted net profit of NOK 1,031.7 million ($127.6m) for Q3 2017, up 4 per cent on the same quarter last year, despite a 6 per cent rise in operating costs.

Many analysts had been expecting that the carrier's growth into new markets, including the US and Spain, would impede its performance but the carrier’s managed to offset its higher unit costs with a rise in ancillary revenues.

World Airways to relaunch with Dreamliner fleet
US based investment firm 777 Partners has acquired the intellectual property of World Airways, and is planning to relaucnh the iconic US airline as a low cost, long haul airline flying with Boeing 787 Dreamliner aircraft. Initial funding for certification and aircraft acquisitions is being provided by 777 Partners and the investment firm says discussions are underway with Boeing for an initial order for up to 10 787-aircraft.

Ed Wegel, Founding CEO of World said the carrier, which dated back to 1947, was once "the world's largest independent charter airline and served the US military and other clients with great distinction for many years."

Now the plan is to launch scheduled operations between the US, Asia and Latin America. "We will be partnering with low cost, short haul carriers in the US and in the regions we serve to provide connecting traffic to and from our initial planned gateways. We plan to announce our new brand look and feel within the next few weeks, under the direction of our Founding CMO, Freddie Laker," Wegel said.

Managing Partner of 777 Partners, Josh Wander, said, "777 Partners is humbled by the opportunity to participate in the relaunch of World, a seminal brand in the history of US commercial aviation. We are determined to pay proper homage to World's rich heritage by delivering a transformative flying experience rooted in safety, technology and service to the large segment of the traveling public historically priced out of international travel.

CDB finalises order for 70 Boeing aircraft
CDB Aviation has finalized an order for 42 Boeing 737 MAX 8s, 10 737 MAX 10s and eight 787-9 Dreamliners. The order, valued at $7.4 billion at current list prices, was announced as an MOU at the 2017 Paris Air Show and includes a conversion of six 737 MAX 8 orders to the 737 MAX 10.

CDB Aviation, is part of the launch customer group for the 737 MAX 10, the newest member of Boeing's 737 MAX family. "The 737 MAX and the 787 Dreamliner are some of the most advanced, most fuel-efficient airplanes in the world today," said CDB Aviation President and Chief Executive Officer Peter Chang. "We're confident that the reliability, efficiency and superior economics of the MAX and Dreamliner families will be very appealing to our customers.

"Being one of the launch customers of the MAX 10 and bringing the MAX family's orders over the 4,000 milestone further demonstrates CDB Aviation's steadfast efforts to advance its global mission and deliver the latest technology aircraft to current and prospective customers," added Chang.

BOC Aviation in three aircraft deal with Qatar Airways
BOC Aviation has signed a purchase-and-leaseback agreement with Qatar Airways for three Boeing 777-300ER aircraft, currently in operation with the airline. "We are delighted to once more be supporting Qatar Airways’ fleet development plans, building on a long-term relationship that dates back to 1999, and adding popular, in-demand aircraft on long-term leases to our portfolio,” said Robert Martin, Managing Director and Chief Executive Officer of BOC Aviation. “This incremental capital expenditure is in line with our current strategy of growing our fleet through disciplined investment."

UAE may build Russian 250 seat airliner
At the Dubai Airshow the CEO of Rostec, Sergey Chemezov, announced that Russia and the United Arab Emirates had started preliminary talks on joint production of a civil aircraft, which could be produced jointly in the UAE. The release states that the aircraft would be based on Russia's single aisle twin passenger jet, the MC 21-400 with the capacity of 250 passengers. "We will create a working group to discuss it further," said Chemezov.