Ask any lessor what is the most interesting model in the market at the moment and you will most likely get a politician’s answer, a deflection from what they really think, and that would be the rise of NAS and Transportation Partners (Lion Air Group) as lessors that have purchased aircraft at very good prices and that are able to offer 5-6 year lease periods, something that all other lessors have pulled away from in recent years following getting burned somewhat.
As mentioned previously over the past year or so, the Batam MRO facility gives Transportation Partners an edge which I believe other lessors might need to follow, having their own massive MRO facility at hand reduces re-configuration costs and increases turnaround speed.
Last week we had Intrepid registering for an IPO and AWAS selling off another chunk of its book into Asia and China Investment Corp (CIC) – the sovereign wealth fund and AVIC the Chinese OEM – in talks to buy Avolon on the back of what seems to be another IPO false trail. AWAS a few months ago drew media attention surrounding an IPO into the Asian market and used the same as a pathfinder to sell off part of their portfolio. We could argue that ILFC did the same. Are we seeing the same again here with Avolon? It is amazing to see what purchase interest can be drummed-up by an SEC filing.
One could argue that CIC has its eye on aviation during this period anyway, it has a 10% stake in Heathrow Airport Holdings (HAH), which is about to pay-off as Heathrow looks to dispose of airports at speed. Contacts on that matter suggest that CIC might be interested in purchasing HAH airfields if they are sold off in a batch. Avolon has raised $7.2 billion in capital since its launch in May 2010. It has a fleet of more than 190 aircraft serving 46 customers in 27 countries.
This is on the back of Intrepid Aviation’s draft registration filing with the SEC for a possible IPO. Intrepid also upsized and priced a notes issuance. Initially launched at $150m, the 6.875% 2019 senior notes were upsized to $215m. The notes, which priced at 102% of par, will be issued as additional notes under the indenture governing the outstanding $300 million in aggregate principal amount of 6.875% senior notes due 2019 that were issued on January 29, 2014. The notes are co-issued by Intrepid’s wholly-owned subsidiary, Intrepid Finance.
So can we argue that the aircraft lessor IPO is actually being used as a pathfinder for the desired outright sale? A pattern is emerging that argues the answer is a yes. That being the case who is Intrepid looking to sell-out to? Watch this space.
I would be more interested in seeing a very large LCC in the APAC region file an IPO within the next year or two - Look out for that.
Lessors look to cash-in
