Adia buys into USD 1.4 bn of Avolon’s leased jets through a new leasing platform with I Squared

The Abu Dhabi Investment Authority (Adia) is acquiring a stake in a USD 1.4 bn aircraft portfolio leased to international airlines. Adia, Irish lessor Avolon, and US infrastructure investor I Squared Capital are launching Constellation Aviation, which will start by buying 22 aircraft from Avolon, Avolon said in a statement. The jets average about five years old and are on lease to 17 airlines in 15 countries.

Why it matters: Adia is buying into a market where airlines want more planes than manufacturers can deliver. Airbus and Boeing’s combined order backlogs stretch beyond 11 years, pushing lease rates higher as airlines struggle to add capacity. Constellation’s investors get long-term contracted lease income, plus access to Avolon, which holds one of the largest order books with both planemakers, I Squared co-founder Gautam Bhandari said in the statement.

Avolon will still run the fleet: Avolon will keep a minority equity stake and stay on as Constellation’s exclusive manager and servicer. The partners plan to grow the platform to as much as USD 6 bn, Reuters reports, citing a source it says is familiar with the agreement. Six banks, including BNP Paribas and Mizuho, are leading a syndicated debt facility for the venture.

DAE has been building similar platforms: Dubai Aerospace Enterprise (DAE) launched Mustang Aerospace with Neuberger Specialty Finance in July, targeting around USD 6 bn in aircraft investments, three months after setting up Equator with Blackstone to deploy roughly USD 1.6 bn a year. Qatar’s Lesha Bank also agreed in September to buy 33 leased aircraft from Avolon, a portfolio valued at c. USD 1.6 bn.