Jet Bank banking on charter operators
Treasury managers at top airlines have had a significant aircraft leasing problem for several years: finding time to meet with the different operating lessors who want to finance their aircraft. There are only so many lunches, dinners and cocktails in a week.
Business jet charter operators with owned fleets have had the opposite experience. Jet Bank, a new corporate aircraft leasing firm, founded by Thomas Garbaccio, wants to change this.
“Business aviation is about 20 years behind commercial aviation finance. If you look at the airline industry, well over 50% of the fleet is on lease,” Garbaccio tells Corporate Jet Investor. “This is because your fleet is a great way of unlocking equity to continue your business expansion.”
Garbaccio launched FTAI Aviation – a specialist commercial aircraft engine leasing company more than 10 years ago. It is now listed on the NASDAQ under the ticker FTAI with a $2.9bn market cap.
Jet Bank has raised $250m in launch equity, which he says will allow it to finance more than $500m in aircraft by adding moderate debt. He says that this is just the start. “The plan for us now is to get a few deals under our belt,” said Garbaccio. “We will be approaching charter operators who are looking to free up to $100m in cash and say, we can help you do that.”
Jet Bank’s core product is pure operating leases. Operators will sell their aircraft to the company and then lease them back for three to five years or longer. At the end of the lease, operators can simply return the aircraft. Jet Bank will either re-lease or sell the aircraft.
Jet Bank can also help charter operators find aircraft for sale and then buy and lease them to the operator.
Garbaccio is not concerned that Jet Bank is launching at the peak of the business jet market. “The markets are softening and more inventory is coming to the market, but this also makes it a good time to enter. Residual values will fall on some aircraft but it is a case of picking the right ones. OEMs are also raising prices,” he says.
Jet Bank is not the first operating lessor to target business aviation. But its focus on operators who rely on aircraft for revenue is different. It is not looking to compete with banks or other financiers on deals for individuals or corporates. “We want to encourage other lessors to look at business aviation and bring institutional capital to business aviation,” he says.
If Jet Bank is successful, charter operator finance teams can look forward to new options. And some good meals.
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