Jetrader - Winter 2017 - 37

the manufacturers and we have a strong
balance sheet to support these types of
deals. We've also grown our investor relationships as we trade some of these big
positions we take. We've had two strong
years on the trading side, delivering large
scale deals, like our 20 aircraft trade with
Aircastle announced last month. Similarly,
with our shareholders we've built a strong
investor base in Japan which has been a
significant growth market for us.
You've said that Ireland is well positioned geographically to conduct
business with the East and West, but
there's more to SMBC Aviation Capital's
success than its address.
Obviously I'm biased because I'm Irish,
but this is a central time zone, and Ireland
is a small country on the edge of Europe
so we always have to look outwards. That
makes us more open to doing business and
working with people. That is one factor,
certainly, but the team we have here has
been together for the past 15 years. That
continuity, along with our strategy of
investing in the most popular in-demand

aircraft has been consistent throughout all
those years, and has enabled us to deliver
solid returns.

done a lot of large deals with them and
with other airlines including Aeromexico
and Sky Chile in this market.

With the largest percentage of
SMBC Aviation Capital's assets
located in Asia, is there still growth
potential in that market, or do you see
saturation in the near future?
For the foreseeable future, Asia-Pacific,
specifically China, will lead the growth
in the aviation industry, led by passenger demand and requirement for new and
replacement aircraft. It will also be the
biggest growth area in terms of provision
of capital into the industry. This year, we
have secured a lot of our deals from our
new order book in this market. There is also
lots of scope for the future in emerging
economies like Indonesia, Thailand and
India. South Korea has also been a growing
market for us, completing our first three
of six A350s on sale and leaseback with
Asiana this year.
But we also expect to see a lot more
growth out of South America; one of our
biggest customers is Avianca, and we have

Given that we seem to be in a relatively prosperous period at the
moment, do you see warning signs on
the horizon, or do you anticipate that
the status quo will hold for a while
longer?
One thing I've learned over the years is
that the status quo never lasts. Whenever
anyone says that there is a super cycle or
that it's a new paradigm where everything
is going to keep getting better and better,
it doesn't hold true.
But there are some warning signs. At the
moment, everyone's strategy looks great
because there's lots of cheap money and
cheap oil, but a discerning light will shine
on the industry when tougher times arrive.
There are some deals being done at the
moment that we see - like deals on sale
and leasebacks, as an example - that don't
make sense to us, and if they don't make
sense for us, with our competitive cost
of capital, I struggle to see how they're

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Jetrader * 2017-11-09
Winter 2017
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Jetrader - Winter 2017

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