- Domnhal Slattery wants to be biggest in world
- Currently in third positon
- Growth can be achieved by one big acquisition
Ennis born Avolon founder Domhnal Slattery told Gerry Butler of the International Society of Transport Aircraft Trading that he is seeking another acquisition in a bid to become the largest aircraft lessor in ithe world. The company, owned by China’s HNA Group, recently bought rival CIT for $10bn and now follows only GECAS and Irish rival Aercap in the world market.
He told interviewer Gerry Butler: “This is a very difficult market to get to number one in because most of our bigger competitors are growing and have aspirations for growth,.I think there’ll be one other major acquisition, rather than a series of small acquisitions. And then we’ll supplement that by organic growth. The question is when will that happen? The CIT transaction came at the perfect time from our perspective, in that it wasn’t a distress play but you had a willing seller. We have not seen a distress play in this industry really since ILFC was sold by AIG to Aercap in 2013. We work in a cyclical industry so if you’re pragmatic and you’re looking out over the next number of years, your experience will tell you there will be distress eventually. I can’t actually see it at the moment, but it will come.
He said he would operate the business on a debt-to-equity ratio of around 3:1. “This business must fund itself in the capital markets. We’ve been a very successful participant in the bank market over the last seven years, Given the scale of our needs, we have to diversify. We started that earlier this year with the $8.5bn of debt capital we issued for the acquisition of CIT, which was a $5.5bn term loan and a $3bn inaugural bond.”
He said he has been concerned for some time that too many aircraft are being produced by the manufacturers.Currently the lease rates lessors are garnering for new equipment are probably below where we expected them to be because of competition. At the same time I’m sort of dumbfounded every year that airlines still have the capacity to take them. There may be potential stresses in the market for wide-body aircraft.
Avolon is owned by China’s HNA Group. It recently bought rival CIT for $10bn and is third behind GECAS and Irish rival, the Gus Kelly headed Aercap in the world market.