Aircraft lessor Avolon has achieved a second
capital raise of $650 million (€482 million), made up of $250m in
equity and $400m in debt finance.
It has also agreed terms to acquire 11 new
aircraft from four airlines under sale and leaseback, including two
Airbus A320s to Philippine Airlines; three A320s to Indian carrier
Indigo Airlines; three Boeing 737-800s to Air Berlin; and three
737-800s to Australian carrier Virgin Blue.
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Denis Nayden, Avolon chairman, said: “We are
pleased to announce our second capital raising of $650 million,
which brings our total capital raising for 2010 to more than $2
billion.”
Avolon’s committed fleet currently stands at
more than 60 aircraft, valued at more than $2.8 billion, and the
proceeds of the most recent capital raise will be used to support
ongoing growth of the fleet.
It will continue to acquire aircraft mainly
through sale and leaseback arrangements this year.
Neil Poland, a partner at law firm Norton Rose,
with expertise in the aviation sector, said that sale and leaseback
of commercial aircraft, as well as the use of operating leases, is
likely to become more prevalent as the commercial debt market
remains constricted.
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By GlobalDataHe said: “Sale and leasebacks have always been a
feature of aircraft financing. It gives airlines the ability to
enter into operating leases as opposed to finance leases.
“What we’re seeing at the moment is an increase
in capital moving into aircraft financing and there have been a
number of new leasing vendors established over the last 12
months.
“New businesses like Avolon are writing quite a
bit of sale and leaseback business with airline customers.”
Rather than entering into purchase agreements
with manufacturers lessors are able to deal directly with
airlines.
Poland added that there could yet be more room
for newcomers to join the market as the industry looks increasingly
to operating leases.
“Compared to historic levels of operating lease
activity, we’re going to see considerably more,” he said.
“People are talking about moving to a position
where 40% of the world’s aircraft are financed through operating
lease. The root cause is that there are limited other sources of
funding.”
