AWAS is one of the world's leading aircraft leasing companies
AWAS was acquired in 2006 and grew substantially with the follow-on acquisition of Pegasus in 2007. Under Terra Firma's ownership, AWAS became one of the world’s leading aircraft leasing companies, with 221 owned aircraft and an original equipment manufacturer delivery pipeline of 15 aircraft.
Asset-Backed: At acquisition in 2006, AWAS owned 154 Airbus and Boeing aircraft, some with attractive long-term leases and many providing strong rental yields. Subsequently, Terra Firma acquired Pegasus and merged the two businesses. We saw the aviation transportation sector as an essential part of economic development, with the world fleet expected to double by 2034 and demand for leased assets set to increase as airlines shift from owning to leasing.
Requiring Fundamental Change: AWAS was a non-core asset, under-managed and starved of investment with an older than average asset portfolio and no new aircraft on order. The business had no real risk management framework and customer concentration issues. Furthermore, the management team and company organisation was decentralised, making communication and decision-making ineffective and slow.
- A new strategy was set out for AWAS to adopt a customer-focused approach to leasing, providing tailored customer solutions and forward fleet planning. It introduced a new risk management framework to actively manage credit and concentration risk and created additional value by reducing operating costs in the business. The subsequent acquisition of Pegasus added a further 80 planes to the asset base and diversified the portfolio.
- The management team was strengthened and the workforce rationalised shortly after acquisition. AWAS’ operations were relocated to a new headquarters in Dublin, Ireland, which has a strong leasing community and Pegasus’ operations were folded into this.
Developing through capital expenditure
- AWAS successfully raised over $500 million of additional equity in 2011, allowing the business to be active in acquiring assets in the market, as well as to fund a new order pipeline.
- AWAS is resourced to capitalise on aircraft investment and disposal opportunities in addition to the more typical ‘buy and hold’ strategy. As part of this more active aircraft trading strategy, the business opportunistically sells off aircraft in order to enhance returns and as part of its planned end-of-life asset strategy.
Building through mergers and acquisitions
- As well as creating one of the world’s leading aircraft lessors, the acquisition of Pegasus realised more than $15 million of annual synergies, reduced the average age of the fleet and provided an attractive order book. AWAS continues to acquire portfolios of aircraft to provide customers with flexible solutions.
Lowering the cost of capital to create extra upside
- The business was repositioned to reduce risk, with the acquisition of newer aircraft and the introduction of credit concentration limits and cash maintenance reserves. AWAS’ capital structure has been actively managed through the introduction of debt financing for pre-delivery payments along with unsecured debt and bond issuances.
Status of Investment: The AWAS investment has been fully realised.
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aircraft in OEM pipeline