The need for better risk mapping and monitoring is escalating. Tightening margins, declining geopolitical stability and rising concerns over defaults and bankruptcies all drive demand for more transparent transactions within the market. Early warning signs of airlines facing challenges can be the difference between removing aircraft quickly and efficiently, or facing a default or repossession.
IBA conducts essential risk mapping across the asset, the credit, the jurisdiction and the lease. Our analysis combines proprietary IBA data, desktop analysis of public sources and expert opinion from within our aviation teams and from other external sources. We are able to deliver actionable intelligence around the value of an asset, the operator’s ability to retain that value, the political and economic direction of key jurisdictions, and both the likelihood and the impact of default. Whether considering the transaction risk, assessing an investment opportunity, setting deposits rentals and reserves, or informing negotiation around second leases – IBA’s analysis delivers greater transparency around decision-making, resulting in: higher margins, improved contract terms, reduced risk and a more efficient spread of credits.
Click here to download our latest brochure on mapping and managing operator risk.
Introducing The IBA Score (IBAS) – our innovating approach to measuring operator risk. Whether hunting value in a transaction, analysing the risk in a challenging jurisdiction or assessing the operating track record of a lessee, our Advisory team can deliver greater transparency around decision-making when looking for greater return on investments and measuring operator risk.
Our IBAS can identify opportunities for margin with riskier operators, highlight risks that might otherwise go hidden, e.g. strong financials but a tricky jurisdiction, or a poor reputation for redeliveries, understand where an operator is strong, or less strong across various quantitative and qualitative metrics and benchmark lessee performance both in relative and absolute terms.
Example Case Study
A lessor was concerned around the liquidity of an Asia Pacific operator and its ability to cover both rental and maintenance payments as utilisation dropped
IBA conducted a thorough review of desktop sources, analysed utilisation data and made discreet enquiries with local MRO facilities in respect of the operation’s current performance. While media searches only indirectly alluded to a problem, utilisation analysis and conversations with local stakeholders revealed cashflow concerns. The lessor insisted on IBA being permitted to conduct an audit which confirmed that the operator was in difficulty.
The lessor was the first to remove its assets and was able to re-lease them before the airline filed for bankruptcy. Competitors with aircraft in situ faced a supply glut for airworthy aircraft and large bill for aircraft in need of maintenance.