Aircraft Securitization
Aircraft Securitization is a financial structure in the aviation industry where the cash flows generated by a portfolio of aircraft leases are used to support the issuance of new securities. It is a method of raising capital by transferring assets, in this case, aircraft, into a separate legal entity or 'special purpose vehicle' (SPV). The SPV then issues securities that are available for investment by the public and institutional investors. These securities are backed by the aircraft and the lease payments made by the airlines. The process allows airlines to free up capital tied in their fleet, while investors get an opportunity to invest in the aviation industry without the need to directly own or operate aircraft. The risk to the investor is primarily the credit risk of the airlines leasing the aircraft. Aircraft securitization is a complex process involving various parties including airlines, investors, trustees, servicers, and rating agencies.
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