Case Studies

Investment Exit for Aircraft Investor

J.S. Held’s Inaugural Global Risk Report Examines Potential Business Risks & Opportunities in 2024

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The Situation

The client was a high-net-worth individual who, for many years, had been investing in aircraft assets, which he subsequently leased to commercial airlines using an asset manager who was well-known to him and who he had relied on over the years for both management services and investment recommendations. The client made contact after various red flags related to the management of four specific off-lease assets were highlighted. The four aircraft, along with parts and tooling, had been an investment recommendation that had incurred significant losses from the outset.

How We Advised

Working alongside an aircraft auditor, we reviewed the maintenance status of the four aircraft. We identified varying shortfalls in the storage programs, including a lack of documented agreements with service centers and poor traceability of removed parts. We also identified the storage location of six engines, which had been sent to engine shops in three continents for overhaul but where no instruction had been provided on completing the work. These were the subject of increasing storage fees and liens.

A plan was developed to repatriate engines and other parts to one location, together with a recommended strategy to deal with the stored aircraft to mitigate the owner’s growing liabilities to the storage facilities, none of which had been paid for considerable periods. Two aircraft were sold to the facility in the UK where they were stored, which had a demand for the avionics and rotatable parts, one aircraft was placed under an active remarketing program, and the fourth aircraft which had been used as a parts source since it was imported into the United States was stripped of all high-value parts and scrapped.

We were able to identify and quantify for the client the magnitude of the issues caused by the mismanagement of the aircraft which he pursued through his legal counsel. We then worked to address and mitigate the growing liabilities, recover and liquidate significant high-value components and engines to cover costs, and find a buyer in a challenging market for the operational aircraft.

Key Contact

Hamish P. Davidson
Managing Director
Corporate Finance
+1 689 223 5380
[email protected]

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