Securitization

In the context of aviation, securitization refers to the process of transforming an illiquid asset into a security. In aviation, this could refer to the bundling of aircraft leases and their subsequent sale to investors as securities. This process allows airlines and leasing companies to raise capital by selling their aircraft leases to investors. The investors, in turn, receive a return on their investment from the lease payments made by the airlines. Securitization in aviation also extends to ticket sales, where future ticket sales are bundled and sold as securities. This provides airlines with immediate liquidity and allows them to manage cash flow more effectively. However, securitization in aviation also carries risks, particularly in relation to the volatility of the aviation market and the potential for default on lease payments or ticket sales.
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