Phoenix American, a managing agent for asset-backed securitizations (ABS) in the commercial aviation leasing industry, has published a new white paper examining the history, evolution and prospects for aviation ABS in the wake of the COVID-19 pandemic economic downturn.

2021 Trend Report for Aviation Asset-Baked Securitization Industry: A Portrait of Resilience, Stability & Future Growth analyzes the evolution of aviation ABS through the three major downturns of the past 20 years, the investors and sponsors involved in these investment programs and the industry’s prospects for the future.

The paper draws on Phoenix American’s observations as a provider of managing agent services, market data provided by the International Air Transport Association (IATA) and the IBA Group and contributions provided by Joe O’Mara, Head of Aviation Finance and Tax Partner at KPMG Ireland.

Top takeaways from the report include an analysis of the performance of aviation ABS through the COVID-19 pandemic, how it compares to its performance through the 9/11 and Great Recession downturns and what that indicates about the durability of aviation ABS during major shocks to the commercial aviation industry.

• Asset-Backed Securitization for Commercial Aviation looks at the origin of asset-backed securitizations starting in the 1960’s and the advent of the aviation ABS in the 1990’s.
• The Managing Agent discusses the role of the third-party administrative agent whose job it is to implement the provisions of the ABS governing document, work with vendors and the ABS board and report on performance to investors.
• A Brief History of Aviation ABS tracks the evolution of this investment vehicle through four distinct stages pivoting around the three major aviation and economic crises of the past 20 years.
• Comparative Analysis Pre and Post-Pandemic examines the distinctions between the last seven pre-pandemic aviation ABS deals and the first seven deals to emerge since the pandemic began
• The Aviation ABS Market Today profiles the current state of aviation ABS, the principal sponsors engaged in the market and the prospects for growth as the world emerges from the disruptions of the Covid-19 pandemic.
• The Expert View from KPMGis provided by Joseph O’Mara, Tax Partner at KPMG and industry veteran involved in all aspects of aviation ABS formation and operations.

“The performance of aviation ABS during COVID-19 shows that today’s deals can endure some very turbulent industry cycles,” Joseph Horgan, senior vice president at Phoenix American, said. “We’re happy to share some of the perspective we’ve gained from decades of hands-on experience with aviation ABS.”

“Despite COVID-19 being the most significant shock our industry has ever experienced, investor appetite for aviation ABS has remained strong, due largely to the refinements made to the structures over the years,” John McInerney, managing director PAFS Ireland, said. “Our team of seasoned aviation professionals and our strong connections in the aviation industry ensures value-add for our clients and their investors”