Avolon

Avolon Aerospace
Industry Aircraft leasing

Avolon is an aircraft leasing company based in Ireland.[1] It was founded in May 2010 by Domhnal Slattery,[2] and a team from RBS Aviation Capital including John Higgins, Dick Forsberg, Tom Ashe, Andy Cronin, Pat Hannigan, Simon Hanson and Ed Riley with initial capital of US$1.4 billion.[3][4] The equity commitment of US$1.4 billion was from four leading international investors: Cinven, CVC Capital Partners, Oak Hill Capital Partners and the Government of Singapore Investment Corporation. Between 2010 and 2014, Avolon also raised US$6.1 billion in debt from the capital markets and a range of commercial and specialist aviation banks including Wells Fargo Securities, Citi, Deutsche Bank, BNP Paribas, Credit Agricole, UBS, DVB, Nord LB and KfW IPEX-Bank.

In December 2014, Avolon listed on the New York Stock Exchange under the ticker symbol AVOL. At listing, Avolon was the largest ever listing of an Irish founded company on the NYSE.[5]

In September 2015, Avolon announced that Bohai Leasing Co., the Chinese leasing and financial services company affiliated with HNA Group, made a cash offer for 100% of Avolon's common shares at a price of US$31 per share. The transaction was approved by both Avolon and Bohai shareholders.[6]

In January 2016, Avolon announced the completion of its acquisition by Bohai Leasing. Avolon is now the core aircraft leasing brand for Bohai Leasing and its parent, HNA Group, having assumed management of the Hong Kong Aviation Capital (HKAC) business, another Bohai subsidiary.

Avolon’s owned, managed and committed fleet, at 31 March, 2016, comprised 402 aircraft. Avolon, together with HNA Group and Bohai’s other aircraft leasing interests, comprises a total fleet of more than 500 aircraft - the world’s fourth largest aircraft leasing business by asset value. Bohai Leasing also invested $1.2 billion incremental equity into Avolon during the first quarter of 2016 providing the business with $3 billion of available liquidity for growth at the end of March 2016.[7]


Avolon Milestones

Ireland and Aircraft Leasing

Ireland is one of the world's leading jurisdictions for aircraft finance and leasing. The Irish industry traces its roots back to the foundation of Guinness Peat Aviation in Shannon, County Clare in 1975 and in the intervening period the aircraft leasing, trading and brokerage industry has proved to be one of Ireland’s greatest success stories. As one of the world’s major centres for aircraft lessors, a survey conducted by the Federation of Aerospace Enterprises in Ireland estimated that aviation leasing companies in Ireland manage assets worth in the region of €82.9 billion.[25]

It is estimated that in excess of US$100 billion of capital will be required every year to finance all the aircraft delivered by manufacturers and aircraft leasing is approaching 40% of the global aircraft financing market. The market has grown as more airlines have concluded that it is better to lease (rent) aircraft which provides for greater flexibility in the aircraft fleet. Some lessors expect the leased component share of the global aircraft fleet to rise to as much as 50% in the next several years.[26]

The Economic Life of Aircraft

In September 2012, Avolon published an analysis of commercial aircraft economic lives and retirement patterns. The purpose was to test whether the current assumptions made by airlines, aviation investors and aircraft financiers, on the economic life of commercial jets - that aircraft should be depreciated over a useful life of approximately 25 years - remains valid. The reason this analysis is so relevant today is that approximately 8,000 aircraft are due to be retired over the next 10 years. This is more than the total number of aircraft retired since commercial aviation began in the 1960s.[27]

The Avolon analysis considers how trends in aircraft retirement have changed over time and identifies key differences between the behaviour of specific aircraft types. The paper also considers the likely impact on retirement trends and aircraft economic values of the retirement of newer fleets, including current Airbus A320 and Boeing 737NG aircraft.[22]

The Transition to Neo and MAX Aircraft

In February 2013 Avolon published an analysis of, and investor guide to, the expected market impact of the transition to new generation Airbus (320Neo) and Boeing (737MAX) single aisle aircraft families. This was Avolon’s second white paper on industry issues and considered how the transition from A320ceo/737NG aircraft to A320Neo/737MAX aircraft will influence the single aisle aircraft market over the rest of the decade and beyond.[15] The Avolon paper found that the effect of the Neo and Max models on the value of their predecessors will be limited by the sheer number of current-generation craft in use today and the high portion of the global aircraft fleet approaching retirement. The authors predict that sharper rises in passenger numbers in developing countries will fuel demand for both Neo and Max models, but also, importantly, current-generation aircraft as airlines seek to add capacity but find themselves at the end of long lines for the new models. Both Airbus and Boeing currently have record-high order backlogs, making the second-hand market an appealing option for fast-growing carriers.[28]

Aircraft Retirement and Storage Trends

In March 2015, Avolon published an updated analysis of the key factors that influence the economic life of commercial jet aircraft building on the analysis issued in September 2012. The 2015 analysis also addresses aircraft retirement and storage trends. The paper concluded that the patterns of retirement behaviour had not materially changed since the 2012 analysis, with the average aircraft retirement age stable at or around 25 years and more than 50% of fleets remaining in service beyond 25 years.[22]

Documentary on Irish Aviation: 'Pioneers and Aviators'

In November 2013, Avolon announced it had commissioned a documentary on the history of Irish Aviation titled: "Pioneers and Aviators, A Century of Irish Aviation. The documentary tells the story of the remarkable, pioneering individuals whose vision, passion, successes and failures helped forge Ireland’s unique aviation landscape. The documentary traces this story from its humble beginnings when Alcock and Brown made the first transatlantic flight, landing in a field in the West of Ireland, through the evolution of Aer Lingus and the development of airports at Foynes, Shannon and Dublin, the pivotalemergence of Tony Ryan, the meteoric rise and fall of GPA, the enduring dominance of Ryanair, culminating in a focus on the contemporary story of Ireland’s leading role in aviation today.

The documentary Writer and Director, Alan Gilsenan, is an award-winning film-maker, writer and theatre director. His film work has appeared on the BBC, ITV, Channel 4, RTÉ, the History Channel and CNBC among others. The score for the documentary was written by renowned Irish composer Mícheál Ó Súilleabháin working with the RTÉ Concert Orchestra.

The premiere of the documentary took place in the Irish National Concert Hall, Dublin on Wednesday 22 January 2014. The documentary was screened in two 52 minute episodes on RTÉ Television on 20 and 27 February 2014[20]

In June 2015, Avolon launched a commemorative photographic book of the same name - Pioneers and Aviators, A Century of Irish Aviation. The book was formally launched by An Taoiseach Enda Kenny T.D. together with Domhnal Slattery, Avolon CEO; Eamonn Brennan, Chief Executive of the Irish Aviation Authority; and Brigadier General Paul Fry, GOC of the Air Corps at an event at Casement Aerodrome, Baldonnel, Co. Dublin.[29]

Europe's First MSc in Aviation Finance

In April, 2016, Europe’s first MSc in Aviation Finance was launched at the UCD Michael Smurfit Graduate Business School. Avolon, together with a number of other leading aircraft leasing firms, is an industry partner of the new Masters' degree. [30]

The course is intended to sustain Ireland’s position as the world’s largest centre for aviation finance and leasing. [31]

Initiatives with the Royal Hibernian Academy

In October 2015, as part of its corporate and social responsibility programme, Avolon announced two initiatives with the Royal Hibernian Academy (RHA):[32] The Avolon Global Studio and Avolon Youthreach Programme. The programme was launched by Domhnal Slattery, Avolon CEO; Mick O’Dea RHA President; and Patrick T. Murphy, RHA Director.

Avolon Global Studio: With Avolon’s support the RHA made a global call-out for an artist who will be awarded a 6-month studio placement, at the RHA during 2016, 2017 and 2018 with the first residency commencing in July 2016. This studio residency offers a once in a lifetime opportunity for an international, emerging artist to raise their profile on a global platform and to develop their practice within the environs of one of Irelands leading contemporary art organisations. On 22 April, 2016 Avolon and the RHA announced the first participant of the Avolon Global Studio Programme would be Colombian artist, Adriana Salazar. [33]

Avolon Youthreach Programme: Collaborating with the national Youthreach scheme, the RHA will invite 6 young students, selected from submissions from the 160 Youthreach Centres nationwide, to participate in four workshops to increase their art skills, introduce them to visiting art galleries and art colleges and offer basic tools of criticism. As well as developing practical skills, by working alongside a practicing artist, this opportunity will offer students the ability to explore the opportunities and challenges of being a professional artist in Ireland today.[34]

References

  1. ↑ "CVC Capital Partners - Our Companies - Avolon". 2010-12-18. Archived from the original on 25 December 2010. Retrieved 2010-12-18.
  2. ↑ "Airline Industry and Aviation Safety News from Flightglobal". 2010-12-18. Retrieved 2010-12-18.
  3. ↑ "Avolon - Our Business". 2010-12-02. Archived from the original on 29 January 2011. Retrieved 2010-12-18.
  4. ↑ "Avolon raises 14 billion - Airfinance Journal - May 2010". 2010-12-18. Retrieved 2010-12-18.
  5. 1 2 "Avolon - Our News" (PDF). Retrieved 2014-02-12.
  6. 1 2 3 "Avolon News".
  7. ↑ "Avolon News".
  8. ↑ "Avolon Equity Deal of the Year=2012-04-17".
  9. ↑ "Avolon - Our Thoughts". Retrieved 2012-09-19.
  10. ↑ "Avolon sponsors the 2012 Mark Pollock Cycle". Retrieved 2012-09-04.
  11. ↑ "WSJ - Bank to Launch Jet Venture". The Wall Street Journal.
  12. ↑ "Avolon Capital Partners". Retrieved 2013-08-08.
  13. ↑ "Avolon - Our News" (PDF). Retrieved 2013-02-22.
  14. ↑ "Irish Independent - Avolon link-up with Wells Fargo takes flight". Retrieved 2013-01-18.
  15. 1 2 3 4 "Avolon - Our News" (PDF). Retrieved 2013-07-23.
  16. ↑ "Avolon Announces Pricing of US$636m Fixed Rate Asset Backed Notes by Emerald Aviation Finance" (PDF). Retrieved 2013-09-27.
  17. ↑ "Avolon Issues Q3 Trading Update" (PDF). Retrieved 2013-10-07.
  18. ↑ "Avolon News" (PDF). Retrieved 2013-10-16.
  19. ↑ "Avolon News" (PDF). Retrieved 2013-11-04.
  20. 1 2 "Pioneers and Aviators". Retrieved 2013-11-20.
  21. ↑ "Avolon News". Retrieved 2014-07-14.
  22. 1 2 3 "Avolon - Deals". Retrieved 2015-04-11.
  23. ↑ DeMuth Jr., Chris (8 January 2016). "Apple Reads Your Mind". M&A Daily (Seeking Alpha). Retrieved 9 January 2016.
  24. ↑ "Avolon 2016 Q1 Update" (PDF).
  25. ↑ "Aircraft Leasing – Ireland as a Key Location" (PDF). Retrieved 2012-05-28.
  26. ↑ "Financial Times - MUFG unit buys US aircraft leasing group". Retrieved 2012-10-04.
  27. ↑ "Financial Times - Aviation leasing – fleet footed". Retrieved 2012-10-04.
  28. ↑ "Financial Times - Sales of used commercial jets buoyant". Retrieved 2013-02-24.
  29. ↑ "Avolon News". Retrieved 2015-06-30.
  30. ↑ "Avolon News".
  31. ↑ "UCD - MSc in Aviation Finance".
  32. ↑ "RHA Gallery".
  33. ↑ "Avolon Global Studio 2016".
  34. ↑ "Avolon RHA Press Release" (PDF). Retrieved 2014-01-16.

External links

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