KKR bets $1.4 billion on aircraft leasing, eyes airlines, Boeing and Airbus
Leasing companies and private equity firms are playing a larger role in financing aircraft purchases as airlines face rising costs and travel demand recovers amid limited aircraft supply. Airlines now rent or lease nearly half of the global fleet rather than owning it; KKR has invested more than $12 billion in aviation since 2015.
Altavair focuses on purchasing new and used commercial aircraft and leasing them to passenger and cargo airlines around the world. A person close to the transaction said the bulk of the capital is still free to be allocated, which will happen over the next four years.
KKR plans to supply the planes directly to airlines looking to cash in, as well as from manufacturers such as Airbus and Boeing, and through secondary market transactions.
These deals often involve purchasing aircraft and leasing them back to carriers under multi-year contracts; This allows airlines to raise cash while continuing to operate their fleets. The person said the company is focusing on long-term leases with established airlines and cargo operators rather than distress or bankruptcy situations like Spirit Airlines, which ceased operations in May.
KKR and Altavair have acquired 188 aircraft and engine assets since 2018 and leased them to 67 airline and cargo customers worldwide. Fuel price volatility and geopolitical tensions have limited short-term impact on such investments because leases typically last five to 10 years and provide predictable cash flow, the person said. KKR has previously supported fleet transactions, including a 2020 deal with Etihad Airways where it acquired Boeing 777 and Airbus A330 aircraft and leased them back to the airline as part of its fleet transition strategy.
