Engine lessors often talk about having to educate investors about their business and how it differs from aircraft leasing.
However, there is a financing sector that is even less well understood: auxiliary power unit (APU) leasing, which primarily deals in short-term leases to provide cover for maintenance visits and AOG situations.
This requires specialist knowledge, so it was little surprise recently to see Volofin Capital Management, already an established lender to the engine leasing sector, providing refinancing for an engine and APU portfolio managed by LXA Leasing.
Speaking at Aviation Week’s Engine Leasing, Trading and Finance Conference earlier this year, Robert Jack, senior managing director and co-founder of Volofin, said that financiers are now more confident about lending into the engine leasing market, having been somewhat “fearful” about it in the past.
However, he said that lenders needed to offer flexibility to help engine lessors navigate the challenges of the MRO market. For example, this might mean allowing an engine to be placed with a more challenging credit for a period to utilize any remaining green time.
Volofin facilitated the recent financing for RIVE Private Investment, a European firm specializing in transportation assets and energy transition infrastructures, secured against a portfolio of 107 aircraft engines and APUs.
These are on lease to MRO providers, OEMs and airlines. Volofin said the highly revolving nature of the portfolio, with predominantly short-term leases, necessitated a flexible and innovative financing structure that allowed LXA Leasing to execute leases quickly.
“It is a non-conventional, but deep aviation asset class, critical for aircraft maintenance cycles, and this structured financing paves the way for new acquisitions to expand our asset portfolio,” said Bachir Lahsini, investment director at RIVE.
