Aircastle in $1.6bn deal to buy 38 aircraft

Aircastle, the only listed aircraft leasing group, announced plans on Monday to buy 38 aircraft from a Chicago-based investment group for $1.6bn in a move which highlights the improving prospects of the cargo market.

The portfolio includes 12 Boeing 747-400 freighters, the largest commercial cargo aircraft, with UPS expected to confirm this week that it has cancelled the sole remaining order for the Airbus A380F.

The proposed deal will almost double the size of Connecticut-based Aircastle, which was floated last year by Fortress, the private equity group. The company is buying the 12 cargo aircraft and 26 passenger aircraft from Guggenheim Aviation Partners to add to an existing portfolio valued at $2bn.

Steve Rimmer, Guggenheim Aviation’s chief executive, described the move as an “opportunistic sale”, though the group will remain in the sector through a fleet of 19 aircraft which it owns or has on order.

Aircastle described the move as “transformational”, providing it with scale at a time when leasing companies are expanding their 30 per cent share of the global aircraft fleet as airlines look for more flexible financing options.

The sector is led by General Electric’s Gecas unit and the ILFC operation owned by American International Group. While private equity firms have increased their exposure to aircraft and leasing in recent years, some executives believe the sector may have reached the top of its cycle, leading some to explore exit strategies.

Bank of China last month paid $965m for Singapore Aircraft Leasing Enterprise, while Avion, the Icelandic investment group, sold its UK charter airline and part of its aircraft trading business last October to a management buy-out group for $501m.

GATX, the US financial services group, last year sold its aircraft leasing business in two parts to Macquarie, the Australian investment group, and AerCap, a publicly listed lessor controlled by Cerberus, the private equity firm.

Terra Firma, the buyout group led by Guy Hands, is understood to be exploring a potential IPO of the Awas leasing business acquired last year for $2.6bn from Morgan Stanley.

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