Launch of a Multibillion Dollar Aircraft Leasing Fund

Service Area
Asset Management, Aviation Finance, Consultancy, Valuation
Target Sector
Investors, Lessors

Challenge

Our client set out to launch and manage a Shariah-compliant aircraft leasing fund with a targeted capitalization of five billion dollars. The structure of the fund required a combination of equity and debt, with a targeted asset profile of new narrowbody and widebody aircraft.

ACC Aviation was engaged to develop the financial model as part of the funds capital raising process, providing critical analysis and due diligence material for prospective equity and debt investors. After successfully launching and capitalizing the funds, the client required further specialist support in negotiating various contracts, including aircraft lease agreements, engine power-by-the-hour agreements, OEM delivery concessions, side letters, and various BFE & SCN selection requirements.

Our Approach

Across the duration of the project, ACC Aviation carried out several key activities:

  • Financial Modeling. ACC Aviation developed a robust financial model, forecasting the fund’s economics, future aircraft values (calculating actual and synthetic values against lease return conditions and maintenance reserves), projected investor returns, lease management fees and fund expenses, debt amortization schedule and various financing ratios.
  • Financing Support. Alongside the development of the financial model, ACC Aviation provided opinion letters confirming expected aircraft residual values at the end of the lease term, including aircraft redelivery conditions and forecasted maintenance reserve balances.
  • Contract Advisory. Throughout the various transaction processes, ACC Aviation advised the client on negotiating various contracts associated with the deal, including aircraft lease agreements, engine power-by-the-hour agreements, OEM delivery concessions, side letters, and multiple BFE & SCN selection requirements.
Return to articles AVIATION ADVISORY ON THE ASSET RECOVERY OF $600M IN NON-PERFORMING LOANS

Client outcomes

The fund was launched and successfully capitalized in line with the client’s objectives. It has since expanded its portfolio to more than 50 new-generation narrowbody and widebody aircraft, receiving several awards for its innovative capital structure and leasing transactions.

ACC Aviation continues to support the client on various technical matters, including portfolio valuations and technical inspections.

Key achievements

  • Successfully capitalized and launched a multibillion-dollar aircraft leasing fund.
  • Successfully deployment of capital into an aircraft portfolio of more than 50 new generation narrowbody and widebody aircraft.

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