Special Purpose Vehicle
In the context of aviation, a Special Purpose Vehicle (SPV) is a legal entity created by an airline or aviation company for a specific, often financial, purpose. SPVs are typically used to isolate the parent company from financial risk. For instance, an airline might create an SPV to finance the purchase of new aircraft. The SPV would borrow money from lenders, purchase the aircraft, and then lease them back to the airline. This allows the airline to acquire new aircraft without adding the associated debt to its own balance sheet. SPVs are also used in securitization transactions, where they purchase assets from the parent company and issue securities backed by those assets. In aviation, these assets could be aircraft, engines, or even future ticket sales. The use of SPVs in aviation finance is a complex area, involving many legal and regulatory considerations.
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