Recovery and remarketing of a non-performing aircraft portfolio

Service Area
Asset Management, Consultancy, Technical Services, Valuation
Target Sector
Lenders

Challenge

A consortium of lenders, led by one of the largest financial institutions in the Caribbean, had provided a lending facility to a national carrier based in the region, which was secured by a portfolio of 11 aircraft assets. Due to several market factors, the debtor airline suffered significant financial distress leading to its collapse, which rendered it unable to maintain the aircraft or service its debt obligations to the lenders.

The lenders found that aircraft were not operational, parked at various locations at the airport, and the airline had not honoured debt obligations for a considerable period. Furthermore, the lenders had little knowledge of the aircraft’s technical condition and current market values nor the best approach to recovering their investment.

The client required the services of a specialist aviation consultancy to advise on their aircraft portfolio and lead the value recovery project.

The consortium of lenders engaged ACC Aviation to provide a range of asset management, technical, valuation and advisory services in relation to the aircraft portfolio.

Our Approach

Our scope of work included:

  • Technical Inspections. ACC Aviation deployed a team of technical resources to perform technical inspections on the aircraft and the airline’s technical capabilities. The condition of all assets was meticulously documented, a technical data room of aircraft records was prepared, and inspection reports were presented to the consortium of lenders.
  • Value Preservation. Our technical team reviewed the assets’ condition and compliance with the applicable storage program, with recommendations on remedial actions to improve the assets’ storage condition and, therefore, value preservation for future sale.
  • Due Diligence. A timeline of the technical and operational status of the portfolio was mapped against the lending transaction, auditing the transaction history against representations made by the airline.
  • Based on the findings of the inspection reports, ACC Aviation’s appraisers provided the lenders with their opinion on the current market value of the aircraft and the likely disposal proceeds on liquidating the portfolio.
  • Remarketing. ACC Aviation was instructed to liquidate and remarket the portfolio. We recommended the optimal remarketing strategy and prepared the technical specification for each aircraft. After approval by the lenders, ACC Aviation led the remarketing project, sourcing offers from interested parties, recommending which offers to pursue, and thereafter project managed the transaction process.
Return to articles AVIATION ADVISORY ON THE ASSET RECOVERY OF $600M IN NON-PERFORMING LOANS

Client outcomes

​As a result, the lender consortium was able to:

  • Understand the technical condition and current market value of its aircraft collateral
  • Understand the transaction timeline and how that mapped out against the technical condition of the aircraft
  • Confidently decide on liquidation of the portfolio, with confidence in outcomes, including likely sale proceeds
  • Dispose of the aircraft portfolio and exit their investment in the aircraft

Key achievements

  • Over ten months, ACC Aviation successfully supported the consortium to prepare and fully liquidate the non-performing portfolio, recovering significant amounts of capital for the lenders.

Related case studies

AdobeStock 132296282

Comair Liquidation: Aircraft recovery, transition, and remarketing

Discover how ACC Aviation navigated complex aircraft recovery and remarketing challenges, securing optimal outcomes for a bank client amidst bankruptcy protection and liquidation.

15 April 2024Read more
AdobeStock 624544739 1 e1693390929761

Advising a lender on drafting and negotiating an aircraft lease agreement

ACC Aviation provided valuable assistance to a West African financial institution by helping them protect their interests and reduce financial exposure during an aircraft remarketing process. Through careful tailoring of the aircraft lease agreement to account for the unique technical condition of the aircraft, ACC Aviation was able to help the lender structure a lease that effectively transferred significant risk and capital expenditure to the lessee.

1 September 2023Read more
image007

Successful aircraft remarketing: maximising value from a distressed aircraft

ACC Aviation's asset management team recently assisted an HNWI in aircraft remarketing and disposing of a Boeing 737-300 aircraft. The aircraft, awarded to the client through a court-ordered settlement, belonged to the now-defunct Tayaran Jet.

8 August 2023Read more
IMG 20230518 WA0030

Performing the lease returns of 1,381 aircraft components from a big 3 Middle Eastern carrier

ACC Aviation was engaged to perform the lease return process on our client’s behalf, performing the physical and technical inspection of the components, ensuring the components met lease return conditions, preparing and managing an open items list, and preparing the technical data room files in support of the remarketing process.

30 May 2023Read more