Jetrader - Summer 2018 - 41

went from 200 or 300 to 400 - is that 600
was a round number, in a sense, where we
could develop a team that had the scale
and the reach to achieve a certain level
of relevance. It is relevant in the same
way that you have adequate size of the
commercial origination team, the technical asset-management team and so on. So
you achieve the highest level of relevance,
whether it's to the customer's point of view
or the OEM's point of view. You could get
to this scale where your pricing can be
effective. So using the right benchmark,
we think we would be right around 150 to
175 employees to adequately support a
600-airplane fleet.
JM: Speaking of the target, I think people
will be interested in the planned fleet mix
of widebodies and narrowbodies. At the
moment, I think you have maybe a handful or less of 777s and a similar number
on order of 787-9s. Of the 600 planes, do
you have any particular strategy around
percentage of widebodies and narrowbodies or what you're thinking on widebody
orders in the future?
PC: We want to be a full-scale operating
lessor, and being full-scale means that we
want to be able to engage with all types
of airlines. By definition, that means we
will maintain a widebody fleet, although I
would not underestimate that some of the
typical issues with the widebody is riskier,
and a smaller operator base contributes

to that risk. So, we have a very cautious
approach in the process of growing it.
Generally speaking, we follow the rules of
having 10 percent of our fleet in numbers
in widebodies, which roughly translates to
30 or 35 percent in terms of value.
JM: In terms of trading of aircraft,
most successful platforms have had an
active trading strategy. Would you mind
explaining your trading strategy in the
future but also whether it's primarily
around Chinese investors or whether
you're targeting a global investor base
for your trading activities?
PC: Trading, of course, is becoming a
very big part of our industry. Trading was
not that prevalent 25 or 30 years ago, and
in many ways it's the ability to trade that
has really had an impact on how we do
business. As an example, because of our
ability to sell the aircraft today, we are
less cautious doing larger orders where you
wouldn't let the concentration risk be the
single limiter in making those decisions.
It becomes common when you do a larger
deal to say "Well, how tradable [is the aircraft] - other than just the risk and the
rent levels?" It has a huge impact on how
we think in doing business today, and it's
very important because we all observe this.
Right now, the selling market is still robust.
We think it's coming towards the end of it
soon, but it's still robust and has been for
some time now.

JM: I suppose the flipside of the robust
trading market is all the new liquidity
and capital that has come into the industry. You talked a bit about whether you
think we're coming to the tip of that
flow of capital. Do you think these new
entrants are here to stay, or do you think
it's fleeting capital?
PC: I'm fairly sure that they are a cycle.
We are already seeing some signs of what
I call the shallow-root entities that are
going away as interest rate rise and as
the foreign-exchange situation in China
[changes]. I think many of the investors
previously in the aviation sector will leave
and that would probably be a good thing.
JM: Speaking of China, obviously people
are interested in whether or not being
part of a sovereign bank gives much
influence in terms of approvals or ordering that comes from the parent. How
independent are you as a business?
PC: One of the reasons that I accepted
the job is that the CDB senior management is very clear about their conviction of
wanting to create this entity that's global
and international. They know precisely
what it means in terms of how much they
have to let go. In terms of our operating environment now, CDB Aviation is an
Irish entity, and in terms of our day-to-day
operation, our systems - or what we call
the macro-approval process - are all selfcontained. We can place aircraft; we can
Jetrader * Summer 2018 41
Jetrader - Summer 2018

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