Corporate versions of the British Aerospace (BAe) 146 and other variants of the regional jetliner will continue to be supported by the OEM following the $187 million disposal of the company’s asset-management division and commercial-aircraft lease portfolio. The business, previously part of BAe Systems Regional Aircraft (BAeRA), has been sold to affiliates of certain funds managed by [New York-based global investment-management company] Fortress Investment Group and now trades as Falko Regional Aircraft.
Falko has acquired an operation that manages more than 150 commercial aircraft worth up to $400 million. Previously owned by BAeRA, the fleet includes BAe 146/Avro RJ regional jets, ATP and Jetstream turboprops and other airliners owned by third parties. The business, which boasts 16 lease customers in 11 countries, is said to be the world’s second largest regional jet lessor by fleet value and the tenth biggest by fleet size. First established in 1993, the mainly UK-based BAeRA asset-management activity had concluded more than 1,800 lease, sale and other transactions valued at more than $3.1 billion.
As the OEM and type-certificate holder, BAeRA will support existing and future operators of the fleet in all matters of continued airworthiness, spares, logistics, rate-per-flying-hour spares programs, technical services and modifications. Its maintenance and engineering capacity will be “made available to Falko as required,” said the manufacturer, which supports more than 600 other BAe Systems-built aircraft worldwide.
Soon after opening its books for business, Falko revealed a radical departure from BAeRA’s established pattern: it would buy regional aircraft for lease, rather than mainly manage disposal of a fleet on which the OEM had held head leases that originally involved large expense and generated little or no income when not in operation.
CEO Jeremy Barnes said Falko would focus on leasing regional aircraft, avoiding larger single-aisle designs dominated by Airbus and Boeing models. “The portfolio yield averages around 20 percent, which compares favorably with most aircraft [lessors],” he said. Barnes’s team includes several former BAeRA managers, including asset-management executive vice president Paul Stirling, senior sales and marketing vice president Steven Doughty and market analyst Rob Morris.
Just as BAeRA’s priority when setting up its asset-management division had been to get all the aircraft back into the air at almost any price, so Falko is seeking initially to maximize cash flow from the existing fleet. But, said Barnes, “as an investment-led company we plan to invest in selective acquisitions of used and [later] new aircraft.” Contributing to cash flow will be the sale of assets “when appropriate,” leasing “where possible” and lease extensions to key customers.
With completion of the deal–essentially a management buy-in by former BAeRA executives–Falkoinherited a mandate to sell a 50-seat Bombardier Dash 8-Q300 turboprop on behalf of Morocco’s Royal Air Maroc. Beyond its core BAe fleet, Falko also picked up almost 40 other aircraft available for sale or lease under third-party remarketing mandates.
Among early agreements has been the lease of a BAe 146-200 for presidential and government flights by Romanian carrier Romavia and the sale of two 94-passenger 146-300s to new African start-up airline Starbow, which operates from Ghanaian capital city Accra. Another carrier buying the 146 is Indonesian charter operator Aviastar Mandiri, which has added a Series 200 to two examples already flying from Jakarta and Denpasar. The three aircraft are used to connect Indonesia’s principal islands and within central and western Kalimantan.
Falko also has arranged the sale of three Boeing/McDonnell Douglas MD-83s for Colombia’s Avianca, two to Missouri-based Jet Midwest and one to Dallas-based Sierra American for charter operation with Ameristar. Two other marketing mandates cover surplus ATP freighters for Scandinavia’s West Atlantic and Jetstream 41 freight-conversion modifications for South African operator SA Airlink.