Since Alcock and Brown ended the first transatlantic flight in a bog near Clifden on the Irish west coast in 1919, Ireland has played a unique role in the development of the global aviation industry. Today millions of people travel in a global fleet of 20,000 commercial aircraft around the world. Almost 40% of that fleet are leased with that projected to grow to 50% by 2020. Half of the world’s leased commercial aircraft are leased and managed from Ireland.
Aircraft leasing as a method of financing for airlines was pioneered by Irish entrepreneur Ryanair founder and airline executive, Tony Ryan in 1975. Ryan, then working for Aer Lingus, the Irish state carrier, spotted this area as an opportunity as a source of financing for smaller airlines and founded one of the world’s first aircraft leasing companies, Guinness Peat Aviation. This became the world's largest commercial aircraft lessor in the 1980s. Following an unsuccessful IPO in the early 1990’s GE Capital acquired the majority of the GPA fleet (and team) to form GECAS which remains the world’s largest aircraft leasing firm today.
Ryan was responsible for training a generation of Irish aviation finance experts who now lead this sector globally. This assembly of talent coupled with a competitive tax regime has allowed Ireland to become the world leader in the area of aviation finance.
One of the leaders of this generation of airline executives who served their time with GPA and Tony Ryan is Dómhnal Slattery. Slattery is CEO of Avolon, one of the newest global aircraft leasing companies. Slattery began his aviation financing career in 1989, with GPA and GECAS. In the past 25 years Slattery has built a reputation in establishing and rapidly scaling industry leading lessor platforms. He has led successive companies through this from founding IAMG which was bought by RBS Aviation Capital and in 2010 he founded Avolon, an aircraft leasing company.
Slattery is in New York this week to tell the story of how Ireland became a world leader in aviation finance at IIBN Opportunity, a conference exploring the business relationship Ireland has with the world.
Air travel is an industry where the demand for aircraft and financing is linked to GDP growth while the supply of aircraft is dominated by two manufacturers, Boeing and Airbus. Aircraft manufacture is a complex, difficult and regulated environment. This has restricted any new manufacturers from entering to compete with the dominant players.
Global demand for aircraft means that Boeing and Airbus are largely sold out of production capacity for the next 5 years. On the other side, demand for air travel has been growing in a sustained and predictable way. This combination of rising demand for air travel and constrained supply provides stable and predictable valuations to underpin asset investment in the sector.
Over the past 20 years the businesses built by Dómhnal Slattery have raised and deployed over US$20 billion to finance aircraft for airlines and aircraft investors around the world. Slattery has achieved this by focusing on risk assessment and oversight.
Avolon the aviation finance company he founded in 2010 have become known in the industry for their research papers. These have examined the supply/demand balance within the aviation industry; the impact of shortening-life spans and early retirement of commercial aircraft; and, the switch to new technology aircraft and the subsequent impact on asset values.
For the next twenty years, it is estimated that 20,000 new aircraft will be needed to meet market growth and the replacement of retiring aircraft. Each year more than $100bn will be required to finance new and replacement aircraft for the world’s airlines. Aircraft leasing is expected to account for the dominant share of that financing.
In its four year life to date, Avolon has become one of the top 10 lessors in the world. The company has raised US$7.5 billion in capital since launch including US$1.4 billion of equity from four leading investors: Cinven, CVC Capital Partners, Oak Hill Capital Partners and the Government of Singapore Investment Corporation.
In addition to this, Avolon has raised US$6.1 billion in debt to grow its fleet. Today, Avolon has a committed fleet of 227 aircraft serving 48 customers and a team of 63 professionals across 5 offices. The Avolon fleet is the youngest fleet of any of the large aircraft leasing firms in the world today.
Slattery has a Bachelor of Commerce (Hons) from University College Galway and is a graduate of the Accelerated Development Programme from the London Business School. He was also nominated for a Fulbright Scholarship in 1993.
Slattery was nominated as a Global Ambassador of ORBIS in 2004 and has worked with the organisation for the past 10 years to raise funds for its work in developing countries. ORBIS is a non-profit organization that works to prevent and treat blindness-related diseases. He lives in Dublin with his wife Elaine and their four daughters.