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A huge new lease of life for DAE

Posted 21 May 2020 · Add Comment

Dubai-based lessor, DAE, has almost doubled the value of its portfolio of managed aircraft, following a deal with a major financial institution. Alan Dron reports.

Dubai Aerospace Enterprise (DAE) has continued its progress to becoming one of the world’s major aircraft lessors.
It has been mandated by one of the world’s largest fund managers to source and manage aircraft valued at roughly $1.4 billion.
The fund manager concerned has not been identified, but DAE will acquire the aircraft and manage them, via its aircraft investor services (AIS) platform, on behalf of the client.
The multi-year mandate tasks DAE with sourcing and managing the aircraft and assisting the investor with the capital structure for them.
Most of the aircraft to be acquired will be previously used narrow-body and wide-body types, sourced through DAE’s relationships in secondary market trading and sale-and-leaseback channels.
This development will increase DAE’s managed portfolio to more than $2.7 billion in assets. Coupled with other projects, DAE anticipates that its managed portfolio will continue to grow to its previously announced target figure of $5 billion.
“DAE is thrilled to have the opportunity to grow its managed aircraft business by sourcing and managing aircraft for a world-class financial institution,” commented CEO, Firoz Tarapore. “We are off to a flying start and have already sourced 25% of the portfolio.
“We own more than 300 aircraft and will manage more than 100. We maintain an active dialogue with 250 airline customers.”
In fact, by early December, DAE counted no fewer than 357 aircraft on its books, with the aircraft owned by the company having an average age of just more than six years. The majority are the single-aisle types most popular with airlines, the Airbus A320 family (135 aircraft) and the Boeing 737 (103).
The company also has 60 wide-bodies, of which the biggest component is 27 Airbus A330-family types.
Relatively unusually for a major lessor, DAE has also gone into the turboprop market in a major way, with a large batch of 55 ATR 72-600s coming from the Franco-Italian manufacturer. Although turboprops have struggled to gain a large foothold in the Middle East (particularly in the Gulf), they remain highly popular in Asia, Europe and Africa.
Overall, the company, which is 100% owned by the Investment Corporation of Dubai, has 110 airline customers in 56 countries.
It is another string to the bow of Dubai’s avowed intention to focus on aerospace as a major driver of its economy and to diversify away from the oil and gas sector.
DAE reached a further milestone in December, when it announced that its portfolio of managed aircraft, together with mandates to source and manage aircraft for third-party investor customers, had reached $3.5 billion.
Since announcing the creation of AIS in January 2018, DAE had, by December 2019, increased its managed fleet portfolio to more than $2.5 billion, managing four aircraft asset-backed securities (ABS) securitizations, as well as aircraft for several investor partners.
The AIS team provides its clients with a single point of contact within the company.
Following a portfolio sale agreement announced last October, DAE’s managed fleet grew to 75 aircraft. DAE has said that it will continue to build its managed fleet as it fulfils existing mandates from investor customers, growing it to more than 125 aircraft in the coming months.
Commenting on the $3.5 billion milestone, Tarapore noted: “DAE’s AIS product is gaining significant traction in the investor community as the only true aircraft investor service product offered by a large leasing company.
“Investors appreciate the ability to access DAE’s substantial and capable platform, while having a team dedicated to serving their needs as customers. DAE intends to remain at the forefront of responding to changing investor needs, with a clear line of sight to a substantially larger managed fleet alongside our growing owned fleet.
“DAE expects to ultimately manage more than $5 billion worth of aircraft assets for third parties.”
 

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