ABSTRACT

The first international securitisation of aircraft was offered by Guinness Peat Aviation (GPA) in mid-1992, with the help ofCiticorp Investment Bank and Lehman Brothers International. A total of 14 aircraft valued at US$380 million were leased to the following airlines at the time of launch of ALPS 92-1, with their share of aircraft appraisal value indicated in bracketsr'

Table 10.1 ALPS 92-1 aircraft portfolio

Canadian (7.4%) Air Jamaica (6.0%), BWIA (5.4%) TAESA (9.7%) Sun Express (5.5%), Malev (5.6%), Istanbul Airlines (5.8%), British Midland (5.7%), Spanair (15.0%), Portugalia (4.6%) Asiana (5.6%), China Southern (5.0%), Philippine Airlines (13.4%), Korean Air (5.4%)

The North and Central America regional share of aircraft value was 28.5%, the European share 42.2% and the Asian share 29.4%. All except Malev and China Southern are now majority owned by private interests, although BWIA, Air Jamaica and Philippine Airlines were government controlled at the time of the issue. The portfolio of aircraft consisted of 6 B737s (various series), 1 B757, 1

B767ER, 1 B747, 2 MD-82/83, 1 A300, 1 A320 and 1 Fokker 100. This gave a spread of manufacturers and sizes, but not of range capability (only two long-haul aircraft). The assets were sold to a Jersey-based special purpose company, which

was financed by equity and $380 million worth of bonds (the senior debt portion of which was rated AA by Standard and Poor) to be repaid from the cash flows generated from the lease payments, plus the proceeds of any subsequent sales of aircraft in the portfolio. Equity investors would get 1012% semi-annual dividends, plus a share in any residual value of the aircraft at maturity. Investors in the company were various European financial

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institutions, principally banks (39%), fund managers (32%) and insurance companies (16%).