LONDON – In steps, global alternative investment firm Castlelake, who boasts relationships with over 200 airline partners, and has in the last week announced that it has completed the financing of a loan deal to United Airlines – one of the biggest airlines in the United States, through its Aviation Lending Programme.
Given the vast financial impacts of the Covid pandemic on the aviation industry, banks have been reluctant to lend as generously as they once did. As such, this has seen a number of private equity and alternative investment firms step in to ease the burden that was once taken care of by the banks.
The loan deal has been agreed is with US power house, United Airlines. The terms of the agreement mean that the loan is secured by four of the carriers 2 year old Boeing 787-9 jets, which have been said to hold a value of over 540 million dollars by Castlelake’s appraisers.
Armin Rothauser, Partner and Head of Asset-Backed Direct Lending at Castlelake said: “We are pleased to partner with United, one of the world’s largest airlines, to provide them with tailored financing solutions to support their global growth strategy.”
Minnesota based Castlelake have been investing in the aviation sector for 17 years, and during this time the company has invested over 17 billion dollars in aviation opportunities, acquiring over 650 aircraft.
This deal makes up part of their Aviation Lending Program (ALP) – an initiative that was launched during the latter half of 2020.
It was established with the intentions of improving the available options to service the needs within aviation finance, in a bid to address what was described at the time as “a systemic lack of financing capacity to serve the aviation sector.”
Since launching the ALP during the Covid pandemic, Castlelake has originated, purchased or committed close to $5.5 billion, and expects this strong momentum to continue, as it works alongside aircraft operators as a capital provider.
“In the current economic environment, we are seeing an increase in demand for flexible financing solutions and more opportunity to partner with airlines, lessors and other industry participants to deliver these solutions,” continued Rothauser.
The jet that is the subject of the financing deal is the 787-9 Dreamliner. The mid-size option of the three Dreamliner variants it is a long range wide-body aircraft, and is configured with a 257 seat capacity in a four class configuration (business class, premium plus, economy plus and economy).
They are powered by two General Electric GENX-1B76 engines, and command a list price of around 292.5 million dollars when purchased from new.
United enforced the importance of their relationship with the alternative investment firm, with Pam Hendry, Vice President and Treasurer at United venturing:
“Castlelake’s deep expertise in aviation financing and investing have been exceptionally valuable throughout our relationship. Through this transaction, we are able to further support our customers and global fleet.”