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AVIATION ASSETS INVESTMENTS

Aircraft Finance: A new opportunity for private investors, private equity and investment funds

According to the FAA forecast, the commercial air transportation industry will grow at an average of 3.7% over the next five years. An average of 3.6% growth throught 2031 is also forecast.

International aviation administrators and manufacturers show numbers that are much more relevant, including Latin America growth of an average of 9% a year and Asia growing over 11% average a year.

Business aviation has also followed similar steps.

Acquiring aviation assets as an investment have several different formats and those could be: financial stressed aircraft, technically beaten aircraft, purchase options of future deliveries, aircraft that are positioned in low liquidity markets, etc.

In terms of the types of assets that are suitable for investiments we can mention the following:

  • Direct investment in aircraft and/or aircraft-owning entities (asset based investment)
  • Loans secured by aircraft titles or by the entity that holds its title
  • Secured (asset based) privately placed notes
  • Equity investment in aircraft leasing firms or joint ventures

Co-investments are also possible, i.e. when investors join forces with other funds and lenders.

Advantages of Aviation Assets Investments:

  • Price fluctuations are very low (history)
  • It is an asset based investment (title control)
  • Aircraft are serialized, what allows a full view of the market trends
  • ROI can easily reach 25% a year (no results are guaranteed)
  • There is no geographical effect (if Europe is in crisis, fly to China!)
  • Depreciation is predictable (appreciation is the case!)
  • Number of aircraft sold and delivered are fully disclosed and can be researched and analyzed what allows a complete view of the market.

Jay Faria
July 2012 

 

  

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