ISTAT Jetrader - Winter 2020 - 14

PERSPECTIVES

cash flows as institutional investors
seek higher risk-adjusted returns in
alternative assets.
Jetrader: You have directly
participated in the aircraft
trading, leasing and lessee

developed in China and Japan. They
are driven by the same great qualities
we all see in aircraft, which are stable
asset values, long-term contractual
cash flows and market growth at a
multiple of GDP. For many of these
platforms, this will be their first test

SKY Leasing avoided the 80% leverage on 10 year
or older aircraft, which was available in the ABS capital
markets. SKY Leasing did an ABS in 2017 with an
aircraft fleet younger than four years.
aircraft placement market since
the mid-1980s. How has the
older/mid-aged aircraft trading
marketplace changed?
RW: My team and I left the older midlife
aircraft sector in 2004. We learned
from the 2001-2003 downturn that the
airlines either through lease returns,
restructuring or bankruptcy are likely
to have the older aircraft exit their
fleet and focus on younger aircraft and
new OEM deliveries. The reasons are
costly maintenance, fuel efficiency
and consumer preferences. The older
aircraft values and risk returns are
driven by extending the economic life of
the aircraft, which is just the opposite
of what is happening now with the
pandemic. The other driver of midlife
values are manufacturer productions
levels and the speed at which new
technology is introduced to the market.
We have had a new technology
replacement for every major aircraft type
in the last 10 years, which put further
pressure on older midlife aircraft.
Jetrader: What are the major lessor/
investor location geographical
shifts/changes that have occurred
over the past 20 years or so?
RW: We have seen a major increase
in capital and leasing platforms being
14

* T H E O F F I C I A L P U B L I C AT I O N O F I S TAT

of surviving a crisis and working
through airline restructurings. We
expect the long-term supply of
capital from Asia to continue despite
the challenges presented by the
COVID-19 crisis.
The other investor shift we see
is more interest from institutional
investors like pensions, endowments,
sovereign wealth funds and family
offices. This investor class is primarily
based in the U.S. and Europe and
has grown tremendously both in size
and sophistication.
Jetrader: A bit too early maybe,
but are there already lessons to
be learned from this crisis? Even
top-tier airlines are suffering, and
a number of operators are handing
back equipment or seeking
to reduce lease rates, return
compensation, etc. Have lessors, in
some cases, relied too much on the
strength of the lessees and, under
pressure from the competition,
been too aggressive?
RW: The lesson I learned emerging
from previous crises is stay invested
in young and new aircraft, long lease
terms and a diversity of airlines. The
airline order book has been and will
continue to be the SKY Leasing order

book. The SKY Leasing sale and
leaseback model allows for the timing
of investments. SKY Leasing and
predecessor companies have secured
new aircraft orders on forward
delivery by acquiring these positions
from airlines.
The second lesson is that a high
amount of leverage placed on older
aircraft will limit a lessor's ability
to help their airline customers work
through a restructuring. Lessors
will need to carefully manage their
leverage during the recovery so that
lessors can continue to assist the
airlines during the recovery phase.
I think the capital markets will open
again for lessors with a greater
focus on portfolio composition and
the mix of aircraft age and lease
term remaining.
Jetrader: What advice would you
give to someone just coming into
the field?
RW: My best advice to those entering
the aircraft leasing industry is to
work as an analyst at a data driven
aircraft lessor, financial institution
or focused aircraft investor. Our
industry produces lots of data, but
the challenge is how to organize it to
make better investment decisions.
All of our new hires in each company
started as an analyst. Do not become
isolated in a silo within an aircraft
leasing company. You need to know
technical, airline relationships, capital
markets, administration and how to
make money across the 25-year life
cycle of an aircraft. In my aviation
career, it's been rewarding to find
and mentor talented people who have
gone on to start or lead successful
leasing businesses such as Robert
Korn at Carlyle Aviation Partners; Bob
Brown and Will Hudson at VX Capital;
Kevin McDonald as CEO at Jackson
Square Aviation; Steven Patch and
Spencer Ho at Gryphon Aviation; and,
of course, Austin Wiley and Matt
Crawford at SKY Leasing.



ISTAT Jetrader - Winter 2020

Table of Contents for the Digital Edition of ISTAT Jetrader - Winter 2020

ISTAT Jetrader - Winter 2020
From the President
News & Events
Perspectives: Q&A With Rich Wiley of SKY Leasing
Winds of Change
10 Years of Air Shows
ISTAT Foundation
Appraisal: Airbus A330-300 and Boeing 767-300ER
At a Glance: Peter Hopkins
Advertiser Index
ISTAT Jetrader - Winter 2020 - Intro
ISTAT Jetrader - Winter 2020 - ISTAT Jetrader - Winter 2020
ISTAT Jetrader - Winter 2020 - Cover2
ISTAT Jetrader - Winter 2020 - 1
ISTAT Jetrader - Winter 2020 - From the President
ISTAT Jetrader - Winter 2020 - 3
ISTAT Jetrader - Winter 2020 - 4
ISTAT Jetrader - Winter 2020 - 5
ISTAT Jetrader - Winter 2020 - 6
ISTAT Jetrader - Winter 2020 - 7
ISTAT Jetrader - Winter 2020 - News & Events
ISTAT Jetrader - Winter 2020 - 9
ISTAT Jetrader - Winter 2020 - Perspectives: Q&A With Rich Wiley of SKY Leasing
ISTAT Jetrader - Winter 2020 - 11
ISTAT Jetrader - Winter 2020 - 12
ISTAT Jetrader - Winter 2020 - 13
ISTAT Jetrader - Winter 2020 - 14
ISTAT Jetrader - Winter 2020 - 15
ISTAT Jetrader - Winter 2020 - Winds of Change
ISTAT Jetrader - Winter 2020 - 17
ISTAT Jetrader - Winter 2020 - 18
ISTAT Jetrader - Winter 2020 - 19
ISTAT Jetrader - Winter 2020 - 20
ISTAT Jetrader - Winter 2020 - 21
ISTAT Jetrader - Winter 2020 - 22
ISTAT Jetrader - Winter 2020 - 23
ISTAT Jetrader - Winter 2020 - 24
ISTAT Jetrader - Winter 2020 - 25
ISTAT Jetrader - Winter 2020 - 10 Years of Air Shows
ISTAT Jetrader - Winter 2020 - 27
ISTAT Jetrader - Winter 2020 - 28
ISTAT Jetrader - Winter 2020 - 29
ISTAT Jetrader - Winter 2020 - 30
ISTAT Jetrader - Winter 2020 - 31
ISTAT Jetrader - Winter 2020 - 32
ISTAT Jetrader - Winter 2020 - 33
ISTAT Jetrader - Winter 2020 - 34
ISTAT Jetrader - Winter 2020 - 35
ISTAT Jetrader - Winter 2020 - 36
ISTAT Jetrader - Winter 2020 - 37
ISTAT Jetrader - Winter 2020 - ISTAT Foundation
ISTAT Jetrader - Winter 2020 - 39
ISTAT Jetrader - Winter 2020 - 40
ISTAT Jetrader - Winter 2020 - 41
ISTAT Jetrader - Winter 2020 - Appraisal: Airbus A330-300 and Boeing 767-300ER
ISTAT Jetrader - Winter 2020 - 43
ISTAT Jetrader - Winter 2020 - 44
ISTAT Jetrader - Winter 2020 - 45
ISTAT Jetrader - Winter 2020 - At a Glance: Peter Hopkins
ISTAT Jetrader - Winter 2020 - 47
ISTAT Jetrader - Winter 2020 - Advertiser Index
ISTAT Jetrader - Winter 2020 - Cover3
ISTAT Jetrader - Winter 2020 - Cover4
https://www.nxtbookmedia.com