Avolon, a prominent global aviation finance company, has announced its agreement to acquire Castlelake Aviation Limited (CA Ltd) , an entity managed by global alternative investment manager Castlelake L.P. This strategic acquisition is set to boost Avolon's growth by expanding its aircraft portfolio and enhancing its financial position.
As of March 31, 2024, CA Ltd held total assets valued at US$5 billion, including 105 aircraft on lease, commitments for 13 new-technology aircraft, two leased engines, and nine loans. The portfolio is notably composed of 68% narrow-body aircraft, 70% new-technology planes, with an average aircraft age of 4.7 years and a remaining lease term of 8.4 years. These assets align well with Avolon's current fleet, which will benefit from the added scale and technological upgrades.
This acquisition is expected to accelerate Avolon's earnings and fleet growth, with attractive yields bolstered by the company's robust financial standing. As of June 30, 2024, Avolon reported US$8.2 billion in available liquidity. Post-acquisition, the company's key financial metrics are projected to remain within its target investment-grade ranges, including a net debt-to-equity ratio of 2.8x and next 12-month liquidity coverage of 1.5x.
Avolon CEO Andy Cronin expressed confidence in the deal, highlighting its contribution to the company's growth strategy. He emphasised that the acquisition would strengthen Avolon's cash flow and earnings, supported by the company's liquidity and capital markets access.
Joe McConnell, Castlelake Partner and Deputy Co-Chief Investment Officer, remarked that the transaction benefits all parties involved. It ensures a return of capital to Castlelake's investors, continued high-quality management services for lessees, and Avolon's acquisition of high-quality aircraft assets.
The transaction, which involves US$3.3 billion in transferable debt, is expected to close in Q1 2025, pending customary regulatory approvals.
