With over $2.6B in assets under management, Global Jet Capital specializes in financial solutions for the business aircraft market. Following a recent fourth ABS offering, GCJ sat down with Sarah Keates, Founder, WOI.
Q: Walk us through your ABS strategy
A: BJETS 2020-1 is our fourth ABS offering, bringing total assets securitized to over $2.8 billion and bonds issued to over $2.3 billion. Like lessors across a wide variety of asset classes, the ABS market is a cornerstone of our funding strategy as it allows institutional debt investors a path to support our business.
Our business utilizes a committed bank debt facility of approximately $1 billion – referred to as a “warehouse facility” – to provide liquidity for our transactions. Periodically, we “securitize” a bundle of the leases and loans we have originated and by offering bonds supported by the cash flows from these transactions. Institutional debt investors buy these bonds and we use the proceeds to repay amounts borrowed under the warehouse and provide additional liquidity for the business.
It is important to note that we remain the servicer of all the leases and loans we originate, whether they are part of a securitization or not. Also, we have a significant continuing economic interest in all securitized leases and loans and the customer relationship more generally.
We are pleased that we have broadened our investor base with each additional offering, having added new investors into the BJETS 2020-1 transaction who were attracted to the business aviation sector and our company.
Q: What is the value proposition of business aviation?
A: In simple terms, on-demand access, productivity, and safety. Since the first Learjet rolled off the production line in 1961, business aviation has been helping big and small businesses and entrepreneurs connect with prospects, clients, and partners across the country and across the globe. It’s telling that this value proposition has in no way been diminished by the impacts of the COVID-19 pandemic, instead it has been enhanced by new considerations related to health safety.
Q: How has business aviation proven resilient in 2020?
A: We believe that the business aviation industry entered 2020 exhibiting all the signs of a mature market with balanced supply and demand dynamics, rationale asset valuations, and steady growth patterns. The evidence of this is in all the data that we, and everyone in the industry, have been pouring over since the World Health Organization declared COVID-19 a global pandemic in March. Flight operations, transaction activity, inventory levels, and valuations – while obviously challenged by the pandemic and the associated shutdowns – have all returned to near normal conditions. It is worth noting that the manufacturers have shown tremendous discipline in an effort to protect their employees, and their order books. The production slowdown that took place in the second quarter has all but been lifted at this stage, and production rates are nearing their pre-COVID levels. What we are seeing today, almost 9 months into this situation is a far cry from what we saw post 2008.
Q: How has GJC maintained business continuity through 2020?
A: Business continuity has not been an issue for Global Jet Capital. Once it was clear we were dealing with a global pandemic we turned to existing disaster recovery protocols and quickly adapted to a work from home, shelter in place posture. We immediately completed all business in the active pipeline, and then took a very careful position through most of the second quarter. As Q3 evolved, from a commercial perspective, we returned to a new normal – which means typical business practices albeit in a very different global context. Of great importance to us during this period has been the health and safety of our employees. We have worked diligently to remain connected and provide as much support as possible to a globally positioned team of professionals dealing with all the uncertainty and complexity associated with this pandemic.
Q: In 2021, how does business aviation need to evolve?
A: We believe there is an opportunity for less overall fragmentation across business aviation. This is likely the next significant step in the maturation of the industry. For starters, we lack global or national standards as they related to the way we measure and track operational, transaction, performance, and valuation data. The charter industry remains highly localized and there’s likely an opportunity for more large national or global brands – the same could likely be said for the broker dealer network that despite significant efforts by the International Aircraft Dealers Association, remains highly fragmented and unregulated.
Q: What’s next for GJC?
A: At this juncture, we are very pleased with the progress of the business. We are developing a strong well recognized global brand. The business has performed remarkably well throughout the pandemic. Furthermore, it is our belief that the investment community is beginning to understand the difference between business and commercial aviation – an issue that hindered our earliest efforts in the ABS markets. We will continue to grow the business through the thoughtful and measured approach that has served us well and allowed us to securitize over $2.8 billion in assets and issued bonds valued at over $2.3 billion in a mere three years.
Q: Describe your brand in 3 words
A: Simplified, Customized, Experienced.
Q: In light of the recent outcome of the US presidential elections, how do you expect this to impact business aviation? (e/g sustainability agenda?)
A: We do not expect a major impact. We believe that at the highest levels of government there is an understanding that business aviation is a major contributor to the US economy. According to the General Aviation Manufacturers Association our industry supports $247 billion in total economic output and 1.2 million total jobs in the United States. Not to mention the fact that business aviation is a key driver behind the productivity and agility that drives successful companies across a wide spectrum of industries.
Q: Walk us through your ABS strategy
A: BJETS 2020-1 is our fourth ABS offering, bringing total assets securitized to over $2.8 billion and bonds issued to over $2.3 billion. Like lessors across a wide variety of asset classes, the ABS market is a cornerstone of our funding strategy as it allows institutional debt investors a path to support our business.
Our business utilizes a committed bank debt facility of approximately $1 billion – referred to as a “warehouse facility” – to provide liquidity for our transactions. Periodically, we “securitize” a bundle of the leases and loans we have originated and by offering bonds supported by the cash flows from these transactions. Institutional debt investors buy these bonds and we use the proceeds to repay amounts borrowed under the warehouse and provide additional liquidity for the business.
It is important to note that we remain the servicer of all the leases and loans we originate, whether they are part of a securitization or not. Also, we have a significant continuing economic interest in all securitized leases and loans and the customer relationship more generally.
We are pleased that we have broadened our investor base with each additional offering, having added new investors into the BJETS 2020-1 transaction who were attracted to the business aviation sector and our company.
Q: What is the value proposition of business aviation?
A: In simple terms, on-demand access, productivity, and safety. Since the first Learjet rolled off the production line in 1961, business aviation has been helping big and small businesses and entrepreneurs connect with prospects, clients, and partners across the country and across the globe. It’s telling that this value proposition has in no way been diminished by the impacts of the COVID-19 pandemic, instead it has been enhanced by new considerations related to health safety.
Q: How has business aviation proven resilient in 2020?
A: We believe that the business aviation industry entered 2020 exhibiting all the signs of a mature market with balanced supply and demand dynamics, rationale asset valuations, and steady growth patterns. The evidence of this is in all the data that we, and everyone in the industry, have been pouring over since the World Health Organization declared COVID-19 a global pandemic in March. Flight operations, transaction activity, inventory levels, and valuations – while obviously challenged by the pandemic and the associated shutdowns – have all returned to near normal conditions. It is worth noting that the manufacturers have shown tremendous discipline in an effort to protect their employees, and their order books. The production slowdown that took place in the second quarter has all but been lifted at this stage, and production rates are nearing their pre-COVID levels. What we are seeing today, almost 9 months into this situation is a far cry from what we saw post 2008.
Q: How has GJC maintained business continuity through 2020?
A: Business continuity has not been an issue for Global Jet Capital. Once it was clear we were dealing with a global pandemic we turned to existing disaster recovery protocols and quickly adapted to a work from home, shelter in place posture. We immediately completed all business in the active pipeline, and then took a very careful position through most of the second quarter. As Q3 evolved, from a commercial perspective, we returned to a new normal – which means typical business practices albeit in a very different global context. Of great importance to us during this period has been the health and safety of our employees. We have worked diligently to remain connected and provide as much support as possible to a globally positioned team of professionals dealing with all the uncertainty and complexity associated with this pandemic.
Q: In 2021, how does business aviation need to evolve?
A: We believe there is an opportunity for less overall fragmentation across business aviation. This is likely the next significant step in the maturation of the industry. For starters, we lack global or national standards as they related to the way we measure and track operational, transaction, performance, and valuation data. The charter industry remains highly localized and there’s likely an opportunity for more large national or global brands – the same could likely be said for the broker dealer network that despite significant efforts by the International Aircraft Dealers Association, remains highly fragmented and unregulated.
Q: What’s next for GJC?
A: At this juncture, we are very pleased with the progress of the business. We are developing a strong well recognized global brand. The business has performed remarkably well throughout the pandemic. Furthermore, it is our belief that the investment community is beginning to understand the difference between business and commercial aviation – an issue that hindered our earliest efforts in the ABS markets. We will continue to grow the business through the thoughtful and measured approach that has served us well and allowed us to securitize over $2.8 billion in assets and issued bonds valued at over $2.3 billion in a mere three years.
Q: Describe your brand in 3 words
A: Simplified, Customized, Experienced.
Q: In light of the recent outcome of the US presidential elections, how do you expect this to impact business aviation? (e/g sustainability agenda?)
A: We do not expect a major impact. We believe that at the highest levels of government there is an understanding that business aviation is a major contributor to the US economy. According to the General Aviation Manufacturers Association our industry supports $247 billion in total economic output and 1.2 million total jobs in the United States. Not to mention the fact that business aviation is a key driver behind the productivity and agility that drives successful companies across a wide spectrum of industries.
To Learn more about Global Jet Capital, visit their website.
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