Civil Aviation

The first quarter of 2023 saw only one deal complete, with Altavair Aircraft Leasing entering into an agreement to receive $1.5B of development capital from KKR.

In recent years, transaction activity in this sector has been influenced by:

• PE investment - airlines are seeking greater fleet flexibility, resulting in a pivot from ownership towards aircraft leasing. For investors, including private equity, this provides opportunities to acquire growing aircraft lessors that provide stable long-term revenue streams.
• COVID-19 – the sector was severely tested by the pandemic, with market players using various financial and operational mechanisms to continue trading. This period saw a jump in deal activity as operators were acquired or consolidated.
• Capital investment – changing industry demand, such as the switch from widebody to narrowbody aircraft and the transition to energy efficient models, is precipitating significant demand for new planes.

Although leisure travel is largely back to pre-pandemic levels, especially in Europe and US, business travel continues to lag. The pandemic materially weakened the balance sheet of most airlines globally, and it may take some time for the sector to fully recover. Weaker players may struggle in the extremely competitive environment, as evidenced by the insolvency of Flybe in January 2023 – undertaken by insolvency pratitioners from Interpath. That said, despite a weak economic environment, consumer demand for travel remains strong.