Analysing and managing operator risk, December 2016

IBA Group’s Paul Lyons provides a comparison of fleets and country risk to identify exposures and gives advice on next steps.

IBA recently advised clients with assets in Turkey on options in the immediate aftermath of the coup attempt. Lessors have a large and varied exposure to numerous challenging destinations. In fact, as this is being written, the situation in Ethiopia is deteriorating and once again the industry is looking at if, when, and how to recover assets. Across the multiple aviation cycles, there have been dozens of operator challenges that typically lead to stakeholders demanding different information, including:

  • Lessors want to know how easy it is to recover assets and find new homes for them. What are the costs involved with recovery and preparing to resell or re-lease?
  • Financiers and guarantors want to understand the impact on repayment obligations or loanto-value (LTV) ratios if payments are reduced.
  • Investors need to comprehend the short-term and long-term view of any action taken and how the outcome may impact on the realisable value of their investments.

As within any sector, risk around aviation investments falls into two broad camps: 1) Investing in, or acquiring, the best investments; and 2) staying on top of investments until exit. This article examines both of these aspects.

To read the full article click on the link below.

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