a critical element
of our strategy

Michael Weiss, Head of Aircraft Trading
Aircraft maintenance

Selling aircraft from our portfolio is a strategic priority for the business. We have an experienced team of professionals located around the world dedicated to cultivating relationships globally across a broad spectrum of investors to whom we sell aircraft.

Michael Weiss
Head of Aircraft Trading

SMBC Aviation Capital

How important has aircraft trading been for the business?

Aircraft trading is an intrinsic part of our business strategy. Since we started trading aircraft, we have signed agreements to sell over $12 billion of aircraft assets, comprising more than 400 aircraft, representing over 60% of the aircraft we have ever acquired. We now have over 100 trading partners spanning the full range of investors in the asset class.

While we sell aircraft through the industry cycle for profit and portfolio management purposes, importantly, the high level of trading activity continuously validates the values of the assets on our balance sheet providing significant comfort to our stakeholders.

Our trading activities have enabled us to keep the weighted average age of our portfolio at just 4.2 years, one of the lowest in the industry. Our customers, many of whom we have worked with over several years are made up of other leasing companies, investors and businesses who see the value of investing in aircraft because of attractive returns, the scale of global demand and the fact that these assets are truly mobile. We value our customers and invest time in developing these relationships in our key markets.

A step by step of an aircraft trading transaction

SMBC Aviation Capital
Identify a trade: Our team work with our investors to identify a suitable portfolio of aircraft for sale.
SMBC Aviation Capital
SMBC Aviation Capital
Our customer: Is typically made up of a mix of leasing companies, hedge funds, pension funds, Japanese investors, banks and private equity houses.
SMBC Aviation Capital
The deal team: pioneered by SMBC Aviation Capital, a new deal team is created for every deal and is made up of cross functional members across the business who bring the deal to fruition.
SMBC Aviation Capital
Commercial committee: is assembled to rigorously test the risks and rewards of the deal. Once approved the letter of intent is drafted. The KYC process is undertaken by our Compliance team.
SMBC Aviation Capital
SMBC Aviation Capital
Our technical team: alongside our customer undertake a physical inspection of the aircraft and due diligence on the aircraft documentation and records.
SMBC Aviation Capital
Our Commercial Negotiation team prepare all documentation, the aircraft is novated to the new owner, typically over a 3 month timeframe.
SMBC Aviation Capital
Pre-funding arrangements are made and the deal is closed.

How does the quality of the company’s portfolio support your team’s trading activities?

It’s a key competitive advantage. Our entire portfolio is comprised of the Airbus A320 family and Boeing 737 aircraft, the workhorses of the industry, as well as Boeing 787 and Airbus A350s. These aircraft are in high demand from airlines and are therefore the most attractive to financiers and aircraft investors. Our ability to offer portfolios comprised exclusively of the most liquid aircraft is an attractive proposition to the expanding universe of aircraft investors.

Our ability to offer portfolios comprised exclusively of the most liquid aircraft is an attractive proposition to the expanding universe of aircraft investors.

Michael, you joined the team five years ago, what have been the major achievements and how have these impacted on the business?

Firstly, we have built a really strong team which in total, has been responsible for the sale of 164 aircraft over the past five years. Our trading team is one of the best in the market with members based around the world in the US, Dublin, Hong Kong, Beijing, and Tokyo. This broad geographic spread is absolutely necessary in order to access global markets and investors. Collaboration with our shareholders has been another key strength, built up since the acquisition of the business seven years ago. We work closely with our colleagues in Tokyo to structure and arrange attractive investment products for their clients in Japan, such as JOL and JOLCO. This proven ability to deliver on these products has been a key differentiator for us from our major competitors in the market.

In all, the sales performance over the past five years has helped to reduce concentration risks in terms of airlines and aircraft type as well as to ensure that the company has real time market information and trends in respect of the attractiveness of aircraft types from investors around the world. This allows the company to proactively position the portfolio to ensure that we maintain our industry leading position.

Is managing aircraft an important element of your business?

Managing aircraft has been and will continue to be an important part of our business. We are one of the world leaders in this area and our track record of successfully managing investments for our clients demonstrates this. For example, since 2007, we managed a portfolio of 36 securitised aircraft on behalf of Airspeed.

This year, 23 aircraft were sold involving 16 airlines, to a single aircraft leasing company. Deals for the remaining aircraft have closed since year end.

Managing this portfolio, over a decade, is testament to our ability in the area of managed services and seeing this transaction come to its conclusion has been a major positive for the business. The results of this transaction were to deliver attractive returns to investors, and a strong level of fee generation to the business.

What is the outlook for Aircraft Trading?

The market environment is favourable for aircraft trading at present and the outlook remains good over the medium term. We are confident, however, that should we experience more challenging conditions, we will maintain our very strong performance due to the quality of the assets to be sold along with the dedication, expertise, experience and global reach of our team who leverage their deep and long standing relationships in putting together and closing these highly complex transactions.