Aviation

February 10, 2017
 

Arrangers ramp up JOL and Jolco markets

Alongside the Japanese operating lease with call option (Jolco) product, sold mainly to small and medium-sized enterprises (SMEs) and some high net worth individuals, arrangers are stepping up their Japanese operating lease (JOL) business.

JOL investors are partly motivated by the tax deferral benefits associated with aircraft depreciation allowances, but at the same time are looking for yield in a low interest rate environment.

In return investors are taking metal risk, and JOL arrangers have been strengthening their expertise on aircraft sales and remarketing, via a series of acquisitions of European and US aircraft management companies and operating lessors.

Fuyo General Lease acquired ALM (since renamed Fuyo Aviation Capital Europe) and Financial Products Group (FPG) has a controlling stake in FPG Amentum, while in September 2017 Japan Investment Adviser (JIA) acquired a stake in Amsterdam-based Arena Aviation Capital.

Last December, Tokyo Century Corporation acquired a 20% stake in California-based lessor Aviation Capital Group (ACG).

And in August this year Orix Corporation took advantage of the difficulties at HNA Group to acquire a 30% stake in Avolon.

In addition to strengthening the Avolon balance sheet, one of the synergies identified by Avolon is JOL arranging.

For the major operating lessors, that actively trade their portfolios to manage average life of aircraft as well as the mix of aircraft types, buoyant investor demand in the JOL market is providing easily accessible liquidity.

And for airlines that the JOL arrangers approach directly, selling mid-life aircraft to JOL investors is a good way to  manage their balance sheets and protect themselves against residual value risk.

Airlines like certainty of execution, since JOL arrangers have an established network of tax equity investors, many of  which have closed previous deals.

Market is widely used

Over the past 18 months there have been JOL transactions for carriers including Cathay Pacific, Norwegian Air Shuttle, Cebu Pacific Air, Qatar Airways and Aeromexico, the latter also being busy in the Jolco market.

One of the biggest players is SMBC Aviation Capital, which has moved into JOL arranging as a natural offshoot of its active fleet management strategy.

As of 31 March, SMBC had 675 owned, managed and committed aircraft valued at $18 billion.

Of these, 226 aircraft have already been delivered and are owned, while another 199 are managed.

Via shareholders Sumitomo Mitsui Financial Group and Sumitomo Corporation, the lessor has well-established links to investors across Japan.

Brian McArdle, senior director for aircraft trading, is based in Tokyo, focusing on the sale of aircraft to Japanese investors (JOLs) and arranging Jolco financing.

According to SMBC, following on from strong demand in the Jolco market, the company has also seen a very robust JOL market, where the deals are standard operating leases with no call options, and owned by Japanese investors.

Demand has been driven by Japanese investors seeking a tax-efficient investment, but without the inflexibility of a 12-year-plus Jolco lease, and with the possibility of equity upside from an eventual exit.

SMBC says that with the average age of Japanese company owners in their 70s and rising, there is also growing demand from company owners seeking inheritance tax planning investments — one of which is the acquisition of hard assets, such as aircraft.

Like the Jolco market, the demand increase for JOL investments has driven a real increase in the volume of aircraft and in the number of airlines and lessors participating each year.

For the 2016-2017 financial year SMBC experienced significant investor demand and sold 39 aircraft from its portfolio to 24 investors, 20 of which were new customers.

The strength of the relationship with its shareholders resulted in a collaboration on more than $2.2 billion of JOLs and Jolcos during the course of the year.

In its 2017-18 financial year ending 31 March, SMBC says it took advantage of a continued strong investor appetite for aircraft to further manage its portfolio, selling 72 owned and managed aircraft.

Some of these were large bilateral deals with other aircraft lessors, but there were also some JOLs.

Fifty aircraft were sold from its owned portfolio, including the sale of a 19-aircraft portfolio to Aircastle, and 22 aircraft were also sold from the managed portfolio.

SMBC notes that, while barriers to entry as a JOL arranger are high, there is growing competition and, for example, JP  Lease has invested in Arena Aviation Capital, and before that FPG into the Amentum platform, with both “rapidly growing their market share of the JOL business.”

But SMBC says that, notwithstanding increased market competition, good opportunities for airlines, investors and JOL arrangers remain.

JP Lease invests in Arena

Arena Aviation Capital was founded in 2013 by ex-AerCap executive Patrick den Elzen, and specialises in sourcing mid-life aircraft for third-party investors, and managing the assets through to eventual sale, re-leasing or part-out.

Last year JP Lease acquired a stake in the Amsterdam-based company.

In 2016 Arena began to work on deals together with JP Lease Products & Services, a wholly owned subsidiary of JIA, when JP Lease bought a six-aircraft portfolio from AerCap.

The portfolio consisted of two A320s on lease to Aer Lingus, one A320 and one A321 on lease to Dragonair, and two B-777-200ERs on lease to KLM.

The deal was arranged by Arena, which also arranged the debt financing provided by Deutsche Bank, DVB Bank and Crédit Industriel et Commercial (CIC).

These deals marked the entry of Arena into the JOL market.

During the first six months of 2017, Arena managed the acquisition of 12 aircraft for JP Lease, which has extensive tax equity contacts across all of Japan.

In January 2017 three B-737-900 aircraft on lease to KLM were purchased from Apollo Aviation.

In March 2017, Arena acquired six A330-300 aircraft on lease to Cathay Pacific that were sold by DVB Asset Management.

The original DVB transaction dates back to 2011, when Deucalion Capital X Ltd, an investment fund advised by DVB Bank, acquired six A330-300s from Cathay Pacific and leased them back on a long-term basis.

The six aircraft had all entered the Cathay Pacific fleet before 2001.

In April 2017 two A330-200 aircraft on lease to Brussels Airlines were purchased from Castlelake.

All these aircraft with associated leases continue to be managed by Arena.

Arena also arranged and structured debt financing provided by CIC for the three KLM aircraft and two of the Cathay  Pacific A330-300s, and by another European bank for the other four A330 aircraft.

In September 2017, JIA and Arena launched a joint venture through which JIA invested in the Arena platform.

Arena remains independent and continues to close deals for its own investor base, as well as deals with JP Lease.

Arena was able to access fresh capital to grow and expand its investor base, while the deal gave JP Lease a strong presence in the mid-life segment of the market.

“Jolco investors are primarily looking at the tax deferral benefits, and the yield is very low, but JOL investors, while also taking the deferred tax benefits, are exposed to residual risk and are looking for yield,” den Elzen told GTF in an interview in Amsterdam.

“The Japanese investor base is very credit-sensitive, although there is now more acceptance of new names,” he added.

“In the past, most airlines that were able to access the JOL or Jolco market flew routes into Narita or Haneda, but we are now seeing transactions for a wider group of carriers.

“For investors searching for yield in the low interest rate environment, JOLs offer an investment term of typically between five and seven years,” den Elzen explained.

“The JOL investors are taking residual risk, and at the end of the lease term there could be an extension, remarketing, or even part-out,” he added.

Better pricing in mid-life sector

One advantage of playing in the mid-life segment is that pricing tends to be better than in the sale and leaseback market for new aircraft, where an airline can sometimes send out a request for proposals (RFP) and get 50 bids.

Given the fierce competition in the new sale and leaseback market, however, den Elzen said, “We are now seeing more investors moving into mid-life aircraft.”

Similarly, from the bank lender’s point of view, competitive pressure has led to a compression of spreads on bank debt for mid-life assets.

“Not all banks that lend on new aircraft deals will get involved in mid-life transactions, but there are a dozen or so banks that are willing to take metal risk on balloon payments,” he added.

“For some of the big banks doing aircraft lending, ticket sizes can be too small to make it worthwhile, but they may look at deals where there are three or four sister ships that can be financed at the same time,” den Elzen said.

Arena currently manages around 50 aircraft leased to carriers, including KLM, Brussels Airlines, Cathay Pacific, British Airways, Air Canada and Aeromexico.

Around 35 of these aircraft are managed for JP Lease.

Orix buys into Avolon

Another player looking to expand its JOL business is Orix Corporation, which in August agreed to acquire a 30% stake of Avolon in a $2.2 billion deal.

Chinese conglomerate HNA Group sold the holding as part of a progamme to scale back its balance sheet, having become overstretched during a surge of merger and acquisition (M&A) deals, which incurred the displeasure of the central government in Beijing.

At time of going to press HNA Group was in discussions to sell its remaining 70% stake to Aviation Industry Corporation of China (AVIC).

Avolon was a wholly owned subsidiary of Shenzhen Stock Exchange-listed Bohai Capital, which is in turn 52% owned by HNA Group.

Bohai acquired Avolon in 2015.

Domhnal Slattery, chief executive officer (CEO) of Avolon, said in an interview on Bloomberg Television that securing an investment-grade rating was imperative, and that having Orix as a strong new shareholder would accelerate the move to investment grade.

When the transaction was announced, Moody’s Investors Service said that it was reviewing for upgrade the Ba2 corporate family rating of Avolon Holdings Ltd.

Avolon has a fleet of 890 aircraft, with a focus on new aircraft.

Orix has mid-life focus 

The Orix platform is more focused on mid-life aircraft, so the two separate platforms have little overlap.

And there will be opportunities to collaborate in the JOL market, sourcing aircraft from the fleet that can be sold to corporates and institutional investors, as well as Jolco products for SMEs and high net worth individuals.

Moody’s commented that it expects that Orix’s investment will lead to business and funding synergies, based on the company’s established strength in aircraft finance through operating subsidiary Orix Aviation, and its relationships with investors as well as airlines.

The ratings review is also supported by Avolon’s franchise strength as the third-largest company in the commercial aircraft leasing sector, as well as its solid profitability, effective liquidity management and capital strength.

Moody’s said that Orix’s established operating expertise in aircraft finance and strength of relationships with airlines and investors globally is expected to provide Avolon with new leasing opportunities and enhanced access to capital in the Japanese financial markets.

Orix oversees a portfolio of $10 billion of leases on 200 aircraft, approximately 75% of which are managed on behalf of others.

Orix maintains customer relationships with airlines that have above average credit quality, reflecting its investors’ low credit risk orientation.

More JOLs for FPG

Meanwhile the leading arranger in the Jolco market, Tokyo based Financial Products Group (FPG), is also making a parallel push into the JOL segment.

A recent analysts report says that FPG expects growth in the total amount of equity placement in operating leases to be driven by strong demand from investors, and the ongoing expansion of partner accounting firms and business matching financial institutions.

The report says that FPG believes it can win new customers among major investors with a higher risk tolerance through JOL origination and sales. In JOL transactions, after a lease term expires, assets need to be sold in the market or the term extended through a lease renewal, which means remarketing ability is indispensable.

FPG bought a 25% stake in Amentum in November 2013 and entered into a business alliance. The company bought further equity in May 2015 and made Amentum a consolidated subsidiary, via a 71.25% stake. FPG Amentum’s involvement aircraft lease arrangement, lease management, remarketing, and arranging finance has helped FPG expand its JOL business.

Deals can be small, involving a couple of planes, or can be sizeable portfolios. In October 2017 FPG Amentum closed the acquisition of eleven Boeing 737-800s through a sale & lease back transaction with subsidiaries of Norwegian Air Shuttle. Ten aircraft were delivered during September and October, with the eleventh delivery in November.

Norwegian is likely to be back in the JOL market, since it has taken a strategic decision to lighten its balance sheet by selling 140 aircaft via sale & leasebacks. It has already reduced its capex estimate for the current year from $1.9 billion to $1.75 billion, and for 2019 from $2.6 billion to $2.2 billion.

Given this focus on reducing capex commitment through the sale of up to 140 aircraft, a return to the JOL market looks likely for aircraft that have already been in service for a number of years, as well as sale & leasebacks on new aircraft.

Tokyo Century is also strengthening its position in both the JOL and Jolco market. It has an entire lifecycle strategy, including dismantling at end-of-life, and the sale of used components. These activities are carried out by the Specialty Financing department, which also includes real estate, shipping and solar power, and this operating segment is the central core of its business and an engine of growth.

Last December Tokyo Century Corporation closed an agreement with Pacific Life Insurance Company to acquire a 20% stake in Aviation Capital Group. It plans to expand new aircraft operating lease business mainly through ACG.

Tokyo Century said that, with further protracted growth expected, aviation related business is positioned as a key focus area to transition its business into an “enhanced profit model” as outlined in the Third Medium Term Management Plan.

Following deliberations of various options to further expand the business, the company concluded that partnering with a strong player was the optimal solution to expand its aviation related business, both from a risk management and growth trajectory perspective.

Tokyo Century will seek to further expand its aviation related business and accelerate ACG’s business expansion by providing future primary capital, and creating incremental business opportunities and leveraging on the firm’s extensive network and expertise.

Following the acquisition, ACG is acting as servicer to provide technical and remarketing services for a majority of the aircraft owned by Tokyo Century.

New aircraft operating lease business will be mainly developed through ACG. Additionally, Tokyo Century said that collaboration with ACG on sourcing assets and structuring transactions will enable it to provide JOL/Jolco products and other attractive investment opportunities for its investors.

Tokyo Century will continue to pursue its existing aircraft debt financing business, finance lease business, and businesses conducted jointly with GA Telesis in the area of aircraft parts/aircraft/engine debt financing.

Fuyo General Lease, affiliated with Mizuho Bank, currently has a self owned strategy as well as sourcing aircraft for third party investors. During the period of the previous medium-term management plan, it arranged 16 self-owned aircraft leases, thereby increasing the number of self-owned aircraft to 19. In the new medium term management plan, it aims to further increase the pace of arrangement to around 10 aircraft per year, aiming to have 70 self-owned aircraft in 5 years.

Fuyo General Lease will accumulate operating assets at a faster pace by starting to originate leases that package together multiple aircraft, by expanding the range of airlines and equipment targetted, and by strengthening its internal expertise.

In June 2014, Fuyo acquired UK based ALM, which subsequently changed its name to Fuyo Aviation Capital Europe Limited), and thereby strengthened its ability to expand its aircraft business.

Meanwhile Mitsubishi UFJ Lease & Finance has a medium term management plan which goes under the name “Breakthrough for the Next Decade,” and has identified the global asset business including aircraft/aircraft engines, marine containers, and railcars as one of the key industries on which it places emphasis.

The Mitsubishi UFJ Financial Group Inc (MUFJ) was formally created in 2005 with the merger of Mitsubishi Tokyo Financial Group and UFJ Group.

Companies within MUFJ include MUFG Bank Ltd, Mitsubishi UFJ Trust and Banking Corporation, Mitsubishi UFJ Securities Holdings Co Ltd, and MUFG Americas Holdings Corporation.

It provides investors with a wide array of products, including JOLs.

Mitsubishi UFJ Lease & Finance is itself listed on the Tokyo Stock Exchange. It has been steadily growing its owned aircraft from 126 in 2015 to 143 at present, and the Aviation Finance department has become of of the group’s profit growth mainstays.

Mitsubishi UFJ is also sourcing equity from other regions of the world. In August 2018 London based Floreat, which specialises in investments in public and private equity, real estate and private debt, appointed MUFG to source a portfolio of aircraft on lease to airlines around the world.

Under the terms of Floreat’s latest agreement, MUFG will arrange the debt financing of the portfolio with Floreat and its clients providing the equity.

“We have previously acquired aircraft on behalf of our clients, and this next transaction is further evidence of our belief in aviation leasing as an income-producing investment.” commented Mark Rogers, Managing Director at Floreat. “We are committed to the sector and delighted to be working with MUFG on this mandate, with the long-term potential of this partnership very clear.”

Jolco market busy

Just as buoyant as the JOL market are Jolcos, where the investor base has become receptive to new airlines and a broader range of aicraft types. On the equity side the product is fairly standardised in order to meet the approval of the National Tax Agency (NTA), but in recent yeasr there has been a lot of innovation on the debt side, with the use of Enhanced Equipment Trust Certificates, UK Export Finance debt, and a variety of currencies.

One of the most active arrangers is Asset Brok’Air, which was set up by Thierry Pierson in 2012. It has offices in Dublin, Tokyo and Geneva, and recently opened an office in Singapore. It has a track record of arranging both Jolcos on new aircraft, as well as what it terms vintage Jolcos, which are shorter term leases on older aircraft. As well as arranging deals for airlines, the firm has also been involved in a growing number of transactions for operating lessors.

In late 2016 it arranged the first ever Jolco for China Aviation Leasing Company (CALC), involving two A320s leased to Turkish airline Pegasus. CA CIB was debt arranger. In May 2017 Asset Brok’Air arranged another CALC Jolco, this time featuring an A320-200 for Thai Air Asia. Once again CA CIB was debt arranger.

In 2017 it closed a vintage Jolco on seven Boeing 737-700s and 737-800s which have been flown by SAS since 2001 or 2002. CIC and BOT Lease were debt arrangers. Another regular client is Air France, and in 2017 the firm arranged the first Jolco for an Air France Boeing 787. Natixis was debt arranger. And in June of this year it arranged a Jolco transaction on two Airbus A320s delivered to Air France in October 2017 and March 2018. Banque Postale and CIC were debt arrangers. Watson Farley & Williams represented the lenders in the transaction. Ince & Co acted for Air France.

In the same month, Asset Brok’Air closed an additional three-aircraft vintage Boeing 737-800 deal for SAS, together with Credit Industriel & Commercial, BOT Lease and Bred (Banque Populaire). CIC acted as debt arranger and facility agent/security trustee. Asset Brok’Air is also involved in the container box Jolco market, and in August 2017 it closed a deal for Hapag Lloyd.

According to Thierry Pierson, Asset Brok’Air Managing Director, a large number of Jolco transactions are ready to close in the last quarter of this year.

“Looking at the overall activity we see in the market, the current financial year seems to be running at the same sort of volume as last year for Jolcos”, he told GTF.

Asset Brok’Air is itself involved on the Jolco (finance lease) side of the market, as opposed to the JOL (operating lease) side where metal risk transfer is involved. Unlike most arrangers in the market, the firm is independent, with no links to either a bank or leasing company. Having sourced its transactions on a relationship basis, it then works with different Japanese leasing houses to access the tax equity.

“The key is to have have strong relationships with airlines and leasing houses, with a great understanding of their respective concerns, but as well as doing deals for regular clients such as Air France, SAS and CALC we are also bringing new names to the Jolco market,” says Pierson. “We are also working on deals with currencies that are new to the Jolco product, in addition to the more typical Dollar and Euro funding”.

And as well as new airline names, he expects to see further growth in deals featuring the major operating lessors. “Jolcos featuring an operating lessor are more complex, especially in the context of the operating lessor’s flexibility requirements, and though the equity investors are concerned with the quality of the airline, they are looking to the operating lessor- and not the airline- to exercise the purchase option at the end of the lease term”, he explains.

“The big Chinese lessors have large order books for the most popular new aircraft models, and they tend to favour top tier airlines”, says Pierson. “Most of the major lessors are rated investment grade, and are well placed to tap the Jolco market.”

A number of the major Chinese lessors have tapped the Japanese tax equity market, including CALC, Industrial and Commercial Bank of China unit ICBC Leasing, Bank of Communications unit BoComm Leasing, China Merchants Bank unit CMB Financial Leasing, and China Construction Bank subsidiary CCB Financial Leasing.

“We are seeing more Jolcos that involve operating lessors in the market, and we have worked on a number of transactions, mainly on behalf of Chinese operating lessors,“ says Jackson Chow, Partner in Bryan Cave Leighton Paisner’s (BCLP’s) Global Transport and Asset Finance team. Bryan Cave and Berwin Leighton Paisner completed their merger in April this year.

Over the past eighteen months the law firm has acted as legal counsel on a number of Jolco transactions for a variety of Chinese operating lessors, including: ICBC Financial Leasing , on a deal involving two A320 family aircraft, with equity arranged by FPG and debt provided by BNPP , DBJ and BTMU; BoComm Financial Leasing, on a deal which involved one 737 Max leased to Garuda, with equity arranged by NTT and debt provided by CACIB; CMB Financial Leasing, on a deal involving two A320 family aircraft, with equity arranged by FPG and debt arranged by MUFG Bank; and CCB Financial Leasing, on a deal which involved six Airbus A321s, with equity arranged by Financial Products Group, and debt provided by CCB, MUFG Bank and NAB.

“In these types of transactions , the financiers and the Japanese equity participant would assess risk at two levels – at the level of the operating lessor and the airline”, Chow explains. “Whilst recourse and credit risk is ultimately borne at the level of the operating lessor, Japanese equity participants also assess risk at the airline level. The Japanese equity participants have the intention to see the underlying operating lease run for its full term, aimed at maintaining confidence with Japanese investors”.

According to Chow, future Jolco deals could also be structured via an eligible Hong Kong qualifying aircraft lessor, which would provide additional tax benefits. This follows the enactment of the Inland Revenue (Amendment) (No. 3) Ordinance 2017, with a view to encouraging the use of Hong Kong as a jurisdiction of choice for aircraft leasing. It was framed with reference to common leasing and financing structures customarily used in aircraft leasing worldwide – including Jolcos.

Lufthansa highly favoured

For the traditional long established Jolco tax equity investors, the ideal transaction would be a Boeing 737 or Airbus A320 flown by British Airways or Lufthansa. The German flag carrier financed six aircraft via Jolcos in its last financial year to December 2017.

In March this year San Francisco based BBAM Limited Partnership (BBAM) announced its participation, alongside its long-term partner Nomura Babcock & Brown (NBB), in a $870 million transaction combining senior secured enhanced equipment trust certificates (EETC) and Jolco equity. British Airways has used this Japanese tax equity plus EETC structure before, making its debut in the EETC market in 2013.

The latest transaction is providing financing for 11 aircraft, including two 787-8s, two 787-9s and seven A320neo aircraft. The debt is provided by proceeds from the British Airways 2018-1 certificates, and equity arranged by NBB. Citi was the sole structuring agent, global coordinator and joint bookrunner for the EETC deal. Deutsche Bank and JP Morgan were the joint active EETC bookrunners. BBAM is the structuring agent for NBB and the Jolco equity investors.

BBAM is the only manager in the aircraft leasing industry which is exclusively focused on generating investment returns for third-party investors, as opposed to owning its own aircraft as an operating lessor. It currently has more than 400 aircraft under management.

Though arrangers like bringing names such as BA, Lufthansa, Air France and SAS to the market, the investor base has become receptive to new names- especially where the equity investors are well stablished users of the Jolco product, and comfortable with the structure. Last December flydubai tapped the market for the first time, in a deal featuring a Boeing 737MAX8. And Ethiopian Airlines closed its debut Jolco in May, for an Airbus A350.

One veteran player in the market, taking equity for its own book, is Yamasa, which manufacturers equipment for the thousands of Pachinko parlours across Japan, and has designed a wide variety of new video games for amusement arcades, as well as slot machines for gambling.

Although a sizeable company, Yamasa is privately held, and so is eligible to use Jolcos for deferred tax purposes.

As a highly experienced equity investor, Yamasa has been open to transactions involving new airline names in the market, helping arrangers expand the base of airline users of the product.

In 2014 Yamasa took equity in four Boeing 737-800s delivered to Copa Airlines, which has been expanding its international fleet based in Tocumen International Airport in Panama.

In early 2017 SkyWorks arranged a Jolco for the third 787-9 aircraft delivered by Boeing to Aeromexico. Yamasa provided the equity. Commerzbank was the Facility Agent and NTT Finance, JA Mitsui, IBJ Leasing and Showa Leasing were lenders.

Also in Latin America, Avianca has been able to tap the Japanese market. In January Greenwich, Connecticut based Burnham Sterling & Co, a financial advisory firm specializing in transportation assets, acted as sole financial and placement advisor in a Jolco for Avianca, Latin America’s second-largest airline.

The transaction financed three aircraft, including one Boeing 787 and two Airbus A320s. This was Avianca’s first Jolco transaction and the first Jolco closed on a US Federal Aviation Administration (FAA) registered aircraft using a tokumei kumiai (TK) owner, a type of Japanese limited partnership, which is the preferred investment vehicle for Japanese investors.

The transaction offered Avianca 100 percent financing at attractive rates with a fixed price early buyout option at approximately 10 years.  A regulatory filing from Avianca said that the aggregate amount of the three aircraft was $207.5 million.

“This is Avianca’s fourth successful transaction with Burnham Sterling,” said Lucia Avila, Corporate Finance Director of Avianca.

“We’d heard about Jolcos for some time, and we turned to Burnham Sterling as our long-term partner in aircraft financings to evaluate, structure and place this Jolco to meet Avianca’s needs.

Burnham Sterling successfully structured the transaction while also sourcing low-cost, long-term, on-shore debt in Japan. This transaction opened an entirely new investor market for Avianca”.

“This particular Jolco is notable because Avianca typically registers its aircraft with the FAA, and we successfully addressed the US withholding tax issues related to FAA-registered aircraft leased under a Japanese TK structure, allowing Avianca to tap the deepest source of Jolco investors in Japan”, added Michael Dickey Morgan, executive managing director at Burnham Sterling.

Burnham Sterling structured and placed the transaction with four institutional investors in Europe and Japan.

Burnham Sterling and its affiliates have now financed 17 new narrowbody and widebody aircraft for Avianca valued at over $1 billion.

Avianca has four 787s delivering this year and next, and a large number of A320 family, 124 in all, arriving between 2018 and 2025.

Avianca has also mandated Jolco financings for two more Airbus A320 family aircraft due by year end.

In February Natixis and low cost carrier Thai AirAsia, affiliated to the AirAsia Group, closed a Jolco financing for a new Airbus 320neo, in a transaction that marked a series of firsts for both the bank and the airline.

The carrier is looking to diversify its funding sources at a time when the fleet is growing.

This was Thai AirAsia’s (and the AirAsia Group in general) first direct Jolco, having previously featured in a Jolco for an aircraft on lease from CALC.

The deal was arranged by Natixis, alongside JA Mitsui Leasing as Equity Arranger and Equity Underwriter, and Korea Development Bank (KDB), which together with Natixis acted as Debt Mandated Lead Arranger and Bookrunner. Natixis Japan Securities (NJS) and KDB Tokyo Branch were the lenders.