Avolon has inked an agreement to acquire Castlelake Aviation Limited in order to enhance its growth trajectory and fleet expansion for $5bn. The 118 aircraft deal is considered to be one of the largest aircraft portfolio transactions in recent years. With this deal, Avolon claims to take ownership of a diverse collection of aircraft currently managed by Castlelake.
The acquisition of Castlelake is expected to significantly accelerate Avolon’s earnings growth and expand its fleet at favorable yields. As of March 31, 2024, Castlelake Aviation’s total assets were valued at $5 billion. The portfolio includes 105 aircraft currently on lease, commitments for 13 new-technology aircraft, 2 engines on lease, and 9 loans.
Thrilled to announce this landmark transaction, Andy Cronin, chief executive, Avolon marked that this is a pivotal moment in Avolon’s growth journey. ““The integration of this substantial portfolio will not only diversify our fleet but also strengthen our ability to serve a broader range of airline customers globally.”
The $5 billion portfolio includes a mix of narrowbody and widebody aircraft, reflecting the evolving demands of the airline industry. This acquisition comes at a time when the aviation sector is experiencing a resurgence in demand, driven by a strong recovery in air travel and increasing fleet modernization efforts by airlines.
Castlelake, known for its expertise in managing and investing in aviation assets, has decided to divest this portfolio as part of its strategic reorientation. The sale aligns with Castlelake’s focus on reallocating capital to new investment opportunities and continuing to deliver value to its investors.
Speaking about the deal, Joe McConnell, partner and deputy co-chief investment officer, Castlelake said “ This deal returns capital to Castlelake’s and CA Ltd.’s investors, ensures continued high-quality asset management for lessees, and equips Avolon with an impressive fleet of premium aircraft assets.”
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The transaction is anticipated to close in the first quarter of 2025, pending customary closing conditions. The CA Ltd portfolio will include up to $3.3 billion of transferable debt available to Avolon upon closing, with the remainder to be funded through Avolon’s existing liquidity.
