Altavair markets $582.88 million ALTDE 2025-1 ABS deal

Altavair marketed its debut $582.88 million aircraft asset backed securities (ABS) deal, ALTDE 2025-1. The transaction marks the fourth ABS transaction for 2025, as well as the company's first public aircraft operating lease ABS. 

The transaction is split into A and B tranches. The $527.74 million A notes have an anticipated repayment date of February 2032 and a final maturity date of August 2050. The A tranche has an initial loan to value (LTV) ratio of 67%. The tranche is expected to be rated A by Fitch and KBRA.

The $55.14 million B notes have an anticipated repayment date of February 2032 and final maturity date of August 2050. The initial LTV is 74%. The B tranche is expected to be rated BBB by Fitch and KBRA.

The notes are secured by lease payments and disposition proceeds on a pool of 24 commercial aircraft. Proceeds from the notes will be used to acquire the collateral, fund the initial maintenance reserve, security deposit and expense accounts, and pay transaction fees and expenses related to the offering.

The portfolio consists of 21 narrowbody and three widebody aircraft on lease to 11 lessees in 11 jurisdictions. As of November 30, 2024, the weighted average age of the portfolio is approximately 7.9 years, and the weighted average remaining term of the initial lease contracts is approximately 7.6 years. The portfolio has an initial value of around $787.8 million. 

The portfolio is comprised of 10 new technology aircraft, around 63.7% of the portfolio by value. The new technology aircraft includes six 737 MAX 8s, two 737 MAX 8-200s, and two 787-8s. Furthermore, the portfolio also includes nine 737-800s, three A320-200s, one A319-100, and one 777-300ER aircraft.

The top three lessees represent 60% of the portfolio, which KBRA said is higher than other transactions it has rated. This includes American Airlines at 27.1%, Avianca at 19.4%, and Akasa at 13.5%. The top three countries represent around 60% of the portfolio, again higher than other KBRA-rated transactions. This includes the US at 27.1%, Colombia at 19.4%, and India at 13.5%. 

“While lessees are diversified globally, all payments are required to be made in US dollars with the exception of one aircraft on lease to Volotea,” KBRA read in its report. 

The A320-200 aircraft on lease to Volotea represents 2.7% of the portfolio by value and its lease payments are denominated in euros.  

In the transaction, the delivery period for the aircraft is 270 days, except for two aircraft expected to be on lease to Akasa – representing 13.5% by value. The two 737 MAX 7 aircraft on lease to Akasa have a delivery period of 365 days as they are currently being manufactured. The aircraft have a completion date of July 2025 and August 2025, respectively.

“Historically, aviation ABS transactions have had a successful track record in delivering the vast majority, if not all, of the assets within the prescribed delivery period,” KBRA read in its report. “As a result of COVID-19, there were a few aviation ABS transactions where not all assets were delivered to the ABS issuer and the noteholders were repaid their allocable share. In one such instance, the transaction was reduced to two aircraft.”

To protect against this scenario, the deal includes a covenant, which requires a minimum of seven assets to be delivered by the end of the delivery period or the transaction will be subject to a rapid amortization event to pay down the notes. During this time, equity will be not be eligible to receive distributions.

The three widebodies are on lease to Etihad and Avianca. KBRA noted that both were current on their rental payments as well as being flag carriers for their respective countries. Two 787-8s are on lease to Avianca and one 777-300ER is on lease to Etihad. 

Lead structuring agent and joint bookrunner is Deutsche Bank and structuring bookrunner is Bank of America. UMB Bank acted as trustee,  and Natixis acted as liquidity facility provider.