ANALYSIS: A320s account for 30% of Guggenheim’s ALS portfolio purchase

London
Source: Flightglobal.com
This story is sourced from Flightglobal.com

The Airbus A320 model accounts for 30% of the 50-aircraft portfolio that has been acquired by Guggenheim Partners.

AerCap sold its equity interest in Aircraft Lease Securitisation Limited (ALS) by transferring 100% of its interest in the E-Notes, or the equity securities, to Guggenheim yesterday.

The securitisation comprises 50 aircraft, 46 of which are Airbus A320 family and Boeing 737 Classic and Next Generation narrowbodies. The remaining four aircraft comprise two 757-200s, one 767-300ER and one A300-600 Freighter.

The estimated average age of the portfolio is 11 years with the youngest aircraft being a 737-800 delivered in September 2007. The oldest unit is an A320 delivered in April 1997.

Airbus models account for 34 aircraft, or 68% of the portfolio.

 

The A320 aircraft represents 15 units, among which four were delivered in 1991. Another aircraft was built in 1993. Two A320s are 1998-vintage aircraft, another two were delivered in 2001. The portfolio also includes two 2002-vintagte aircraft, three built in 2006 and one in 2007.

Another 12 aircraft are A321 models delivered between 1999 and 2002. The portfolio also includes six A319s and one cargo aircraft, the A300-600F.

There is one 1991-vintage 737-300 aircraft in the ALS portfolio on lease to Garuda Indonesia until June 2014.

Two 737-400s are leased to Donavia through December 2013 and June 2014, while another three aircraft of the type are on lease to Thai Airways through 2014/15.

The portfolio includes one 737-700 leased to Braathens and six 737-800s on lease to Air Berlin, Caribbean Airlines, Garuda Indonesia and Yakutia.

 

According to the latest ALS documents, one A320 lease expired last month. A total of 42 aircraft, or 84% of the portfolio, are coming up for lease during the next four years.

In 2013, a total of nine aircraft (seven A320s, one A321 and one 737-400) have leases expiring. In 2014, 11 aircraft are up for renewal, followed by nine in 2015 and 13 in 2016. The 737-700 is on lease to Braathens until April 2017.

 In 2018, two A320s at Atlasjet, which were placed earlier in the summer, will be returned along with one A321 from BMI.

Two A319s at BMI along with another A319 at Tatarstan are due to be returned in 2019.

During an anlayst conference call last week, AerCap's chief executive officer Aengus Kelly said narrowbody market lease rates are improving.

"A320 lease rates have just started to flatten out. We don't see any further degradation there," he said.

Lease rates have firmed up this year on the A320 model and Kelly sees this trend spilling over into the A319 market. "This is driven by the same characteristic that underpins all aircraft values and lease rates, which is the diversity and size of the user base of the aircraft type. Simply put, if an aircraft has a large user base, it will always find a home. If it does not, then the value of the aircraft and lease rates will be highly volatile.

"As the A319 has such a large installed user base, and utilises the most fuel-efficient technology in the market, there will always be a home for the aircraft, unlike old technology assets. The tangible evidence of this is that in 2012 alone, there were 14 new operators of the A319. These include airlines such as Allegiant, Aer Lingus, Thomas Cook, and Fastjet. And we are seeing increased demand from our customer base for this aircraft type."

The A321 is also an aircraft that is experiencng an upward movement in lease rates, according to Kelly. "This is an asset with significant demand at the moment."

Kelly says the demand for the 737-800 market has remained robust. "The 737-800, in particular, has been a resilient asset. We've said that all along during the course of the last few years. We did not see the decline of the 737-800 that we saw on the A320."

The September 2007 737-800 delivery has the highest value in the portfolio at $37.63 million.

The asset backed securitisation vehicle was valued at approximately $1.069 billion at 30 September 2011 by appraisers.

The portfolio is leased to 26 different airlines. A total of 16 aircraft are leased to European carriers, while another 10 are with European emerging countries such as Hungary, Russia and Turkey. Only three aircraft are with North American lessees while another four are with Latin American and Caribbean countries. One aircraft is in North Africa while 16 aircraft are in Asia and the Pacific region.