Dublin: Aircraft lessor Avolon announced Friday that it has signed an agreement to acquire Castlelake Aviation Limited, an entity managed by Castlelake L.P., the global alternative investment manager.
Castlelake Aviation Ltd’s total assets as of March 31 were $5 billion, which included a portfolio of 105 aircraft on lease, commitments for 13 new-technology aircraft, two engines on lease, and nine loans. The transaction is expected to close in Q1 2025, subject to customary closing conditions.
Avolon said in a statement that the portfolio comprises 68 per cent narrowbody aircraft and 70 per cent new technology aircraft. Its weighted average aircraft age is 4.7 years, and its weighted average remaining lease term is 8.4 years.
The company said the transaction will accelerate Avolon’s earnings growth, building its fleet at attractive yields. It is supported by Avolon’s strong balance sheet position, with $8.2 billion of available liquidity as of June 30.
“Pro forma for the transaction Avolon’s balance sheet metrics remain within its target investment grade ranges, with net debt to equity of 2.8x and next 12 months sources to uses of 1.5x,” it said.
Andy Cronin, CEO of Avolon, said, “This transaction accelerates our growth plans by adding a portfolio of assets that will further strengthen our cash flow and earnings profile. Our balance sheet strength, high levels of liquidity, and access to established capital markets have enabled us to acquire these assets.”
He added, “They complement our existing portfolio and will increase our fleet at attractive yields, supporting our positive rating trajectory.”
In the UAE, Avolon’s customers include flydubai and Etihad Airways. It also does business with Oman Air, Jazeera Airways, Saudi budget carrier flynas, Qatar Airways, and Royal Jordanian in the region.
The CA Ltd portfolio has up to US$3.3 billion of transferable debt available to Avolon on closing, with the balance funded from Avolon’s existing liquidity sources.
Meanwhile, Joe McConnell, Castlelake Partner and Deputy Co-Chief Investment Officer said, “We’re pleased to collaborate with Avolon on this notable transaction, delivering what we believe is a win-win for all parties: returning capital to Castlelake’s and CA Ltd.’s investor stakeholders, positioning lessees for ongoing high-quality asset management services, and providing Avolon with a fleet of high-quality aircraft assets.”
During the Farnborough Airshow in the UK earlier this year, Avolon announced orders for 310 new engines to power 155 Airbus A320neo family aircraft in its order book. Avolon has ordered 160 GTF engines from Pratt & Whitney and 150 LEAP-1A engines from CFM International.
The combined orders are valued at over $5 billion at current list prices. The agreement also includes options to purchase 160 Pratt & Whitney engines and 150 CFM International engines. The orders represent Avolon’s largest-ever engine commitment.
