Aircraft Finance — A New Opportunity for Private Equity and Hedge Funds?
Michael C. Mulitz, Finance Partner, Daniel J. Hartnett, Finance Partner, Willys H. Schneider, Tax Partner and Thomas A. Jesch, European Counsel (Tax)
According to the Federal Aviation Administration’s ― ‘FAA Aerospace Forecast (Fiscal Years 2011–2031),’ the commercial air carrier industry will grow by a remarkable 3.7% over the next five years. System capacity in available seat miles – the overall yardstick for how busy aviation is on a global scale – will increase 4.5% in 2011 and is expected by the FAA to grow thereafter at an average annual rate of 3.6% through 2031.
In light of the limitation of available funding by commercial banks, private equity and hedge funds maintain an important position in the aviation leasing market and provide a significant source of much needed equity, lending and leasing capital.