Wednesday 20 November 2019

€10bn deal makes Avolon third-biggest global lessor

Domhnal Slattery
Domhnal Slattery
John Mulligan

John Mulligan

Dublin-based aircraft leasing company Avolon has completed its $10.4bn (€9.7bn) acquisition of CIT's aircraft leasing business.

The deal propels Avolon, which was co-founded by Clare native Domhnal Slattery, to being the world's third-biggest aircraft lessor after Gecas and AerCap.

Mr Slattery, who is Avolon's CEO, has previously stated that he intends to grow Avolon to being the world's biggest aircraft lessor.

Avolon emerged as the successful bidder for CIT's leasing assets last October and the deal effectively doubles its fleet size.

Avolon has acquired a business with a "stellar reputation", said Mr Slattery.

"Our immediate priority is to integrate the businesses under the Avolon brand," he said. Immediately before the acquisition, Avolon had a fleet of 426 owned, managed and on-order aircraft. Its customers include airlines all over the world such as Air Berlin, Virgin Atlantic and Aerolineas Argentinas.

CIT's leasing arm had 282 jets at the end of December on operating leases that are part of the sale to Avolon. Additionally, CIT had commitments to buy 128 jets, including 16 Boeing 787 Dreamliners and 37 Boeing 737s. All 17 aircraft due for delivery to CIT this year have lease commitments in place.

Based on figures from the end of last December, the enlarged Avolon group now has a total combined 868-strong fleet of owned, managed and on order jets, valued at more than $43bn (€40.3bn).

The Americas, EMEA and Asia-Pacific each account for about a third of the in-service jets. At the end of last December, AerCap had a fleet of 1,566 owned, managed and on-order aircraft. Gecas has about 1,950, including about 1,700 fixed-wing aircraft and 250 helicopters.

Avolon's acquisition by China's Bohai Leasing was finalised in 2016. Bohai is part of HNA. Avolon said that it is well capitalised to pursue further growth opportunities across "multiple acquisition channels".

Avolon raised $3bn via bond issues earlier this year to help fund the CIT acquisition.

Combined with a $5.5bn secured term loan finalised by Avolon to complete the CIT transaction, the total raised is believed to be the largest financing transaction ever undertaken in Irish corporate history.

It's also understood that the offering had been significantly over-subscribed by investors keen to bankroll the acquisition.

Mr Slattery co-founded Avolon in 2010, securing $7bn (€6.5bn) in private equity.

It floated on the New York Stock Exchange in 2014 but was sold to Bohai just months later.

Avolon's co-founders John Higgins and Andy Cronin also continue as chief commercial officer and chief commercial officer respectively.

Irish Independent

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