SILC 2017 to Stage Discussion Surrounding the Catalysts Behind the Recent Flurry of Consolidations and Mergers in Aviation Leasing

Oct. 24, 2017

Shannon, Republic of Ireland – October 24th 2017: Connecting technical executives from global airlines and the aviation leasing community, the second annual Shannon International Leasing Conference (SILC) is set to take place on Friday 10th November at the University of Limerick. This forum for intelligence sharing and debate will see a distinguished audience of technical strategists and engineers from within the aviation industry come together to discuss a variety of topics.

Following the opening session, the emphasis will shift to a lively debate around ‘Consolidation/Mergers within Aviation Leasing’. With more than $140bn of aircraft assets managed from Ireland, the country continues to develop its position as the global hub for aircraft finance and leasing, and almost all of the world’s leading lessors have established strong operational bases. It is anticipated that invited delegates from the Irish aviation leasing community will challenge panellist opinion provided by: Julian Rouchy Kelly, Chief Operating Officer at Accipiter Holdings DAC; Karl Griffin, Chief Operating Officer at Dubai Aerospace; and John McMahon, Aviation Leasing & Finance Advisor / Non-Executive Director / Lecturer.

How will the recent phase of M&A activity within the leasing business overall impact the Irish aviation scene? Is there more consolidation to come? How is the emergence of Chinese leasing companies affecting deals? How can Ireland’s place on the leasing landscape remain secure?

Expert panellist John McMahon was asked to provide some thoughts in advance of the conference and to comment on the emergence of Chinese financial institutions as a significant force in aircraft leasing. “The past few years have been good for aircraft leasing; traffic growth has substantially outpaced economic growth; airlines have been solidly profitable helped by the significant fall in oil prices; the “quantitative easing” response to the global financial crisis has resulted in a lot of liquidity looking for attractive returns in a low-yield world, and China has recognised that (a) aviation has a key role to play in its economic development, both domestically and internationally, (b) aircraft leasing is an essential funding tool and (c) aircraft, being predominately US-dollar denominated assets, represent a potentially useful currency hedge in the event of a local currency devaluation. As a result, most sizable Chinese financial institutions and many PRC/Hong Kong companies have entered the market. This influx has several implications for the leasing business generally, and for Ireland Inc. in particular. Chinese lessors have been accused of “buying their way into the industry” by either offering unsustainably low lease rates relative to established lessors (but for cost-conscious airlines this is a very attractive proposition) or by “overpaying” for established lessors. However, this shouldn’t be surprising because, to be successful in the longer term they need to take market-share and to buy/build organisations with the functional international experience (commercial, legal, technical – as well as financial) to remarket and trade aircraft.”

For these reasons and others, most new entrants to the aircraft leasing world seem compelled to open an Irish operation. “For decades, Ireland has been at the forefront of developing the aircraft operating leasing market. The resulting cross-border tax treaty network and established industry experience and expertise of its people (not to mention attractive corporate tax rates) make Ireland an obvious choice to start such a business but, inevitably, this affects the supply of talent in Ireland as well as the occasionally complex issue of relocating non-EU staff to the country.”

“All of these features make for an industry that is incredibly dynamic with both opportunity and challenge in abundance.” McMahon observes “I look forward very much to debating the current state of the industry and its future prospects with my fellow panellists at the SILC conference on November 10th.”

The inaugural Shannon International Leasing Conference (SILC) was held last year and Richard O’Grady, Sales Director at Magellan Aviation Group, explains why his company is investing in SILC 2017. “The first step in creating an industry driven initiative was taken in 2016 when fifteen local aviation companies joined forces to create this unique event and we are keen to play a significant role. Our aim is to inform the highly respected specialist aviation audience of around 150 delegates about the commercial and operational benefits that can be exploited. In particular how the technical services based here can be trusted to underpin Ireland’s aircraft leasing industry.”

“This event enables us to engage with leasing companies, airlines and maintenance, overhaul and repair businesses to see how we transform Shannon into a globally recognised leasing hub.” adds John Drysdale, Business Development Director from Shannon Group plc.