Elix Aviation believes the risk calculus has changed in the regional aircraft sector, meaning its newly launched asset management services will help investors to build up their portfolios.
“We are a full-service platform and have experience in asset management,” chief operating officer John Moore tells Airfinance Journal in an interview.
“We are now looking at existing portfolios that have already been established by other owners and investors, and the other side is to identify opportunities to acquire and build aircraft portfolios that we can manage for them. Historically we have invested ourselves while we are now looking to work for third-party investors.”
The lessor could expand its cooperation with investors via debt financing transactions.
“Depending on the type of transactions we are looking at building with partners and investors, we could bring capital solutions like large debt-type solutions based on what we have already done,” he says.
Elix is the servicer of PROP 2017-1, the asset-backed securitisation (ABS) transaction, and has retained a downstream equity investment in the portfolio.
And while Elix has built its skills and experience in the turboprop sector, Moore sees the lessor broadening that scope.
“The most obvious extension will be the regional jet aircraft market because it is a similar market, with similar airlines and lessors dynamics. We have strong relationships in the sector.”
Moore sees the regional aircraft market remaining distressed and relatively uncertain at the moment.
“It is still well below what it could be but we do see a bit more activity and more prospecting for aircraft on the ATR side with a number of start-ups in the regional sector.”
“There are some opportunistic companies coming into the market and there is still a large installed base of turboprops that is going to continue to grow.”
He adds: “Historically regional aviation has been very resilient to the business cycles because it is more an essential business transport in many ways. It is a driver to the global economies but there is still a lot of impact on larger jurisdictions.
Moore says there are constraints on domestic travel, which will take some time to come back.
“At ASK and RPK levels, the USA domestic market is coming back well, but Europe is still fragmented as it is difficult to travel from one country to another. In Southeast Asia the vaccination rates are relatively low and still have a way to go before unlocking the economy.”
Interview of John Moore with AFJ