Falko cleared for take off

Terry Spruce
By Terry Spruce August 4, 2011 22:27

Falko, the newly-launched
aircraft asset manager, enters the commercial aviation market on the back of a
strong portfolio, an excellent financial position and with growth plans for the
future, according to Jeremy Barnes, chief executive officer of the new company.

“Our acquisition of the BAE
Systems Asset Management business with the backing of the Fortress Investment
Group of New York,
will unleash the potential of a talented, experienced and ambitious team who
will now focus on building a future rather than dealing with a legacy,” Jeremy Barnes
said.

He added: “We have the
support of a very powerful financial backer that has made a considerable
investment in the business and is looking to deploy more capital to support and
grow the business. We are now free of past constraints and have greater scope
to be entrepreneurial.”

Paying tribute to the BAE
Systems stewardship of the Asset Management business, Barnes pointed to the strength
of the enterprise that has been acquired.

“We have a fantastic
portfolio of 143 aircraft which has been independently valued at between
US$300-400 million. Our customer base is very strong and we have a contracted
forward order book in excess of US$200 million. The portfolio yield averages
around 20 percent, which compares very favourably with that of most aircraft
leasing companies. The BAe 146/Avro RJ, which make up the bulk of the value in
the portfolio, are wonderful products with a long life ahead of them. They are
reliable, have great performance and utility and because of their low
acquisition or lease costs have competitive economics in a variety of different
market sectors.”

The initial focus for Falko
is to maximise the cash flow proceeds from the current portfolio. This will
continue the strategy of selling assets when appropriate, leasing assets where
possible and extending leases with key customers.

He added: “as an
investment-led company, we are also open to product development opportunities
for the existing portfolio to enhance product value. At this stage, however, we
are not in a position to reveal our plans.”

In the longer- term the
business will seek to exploit emerging opportunities using the proven team and
the robust processes that have been developed over many years.

“We plan to invest in
selective acquisitions of both used, and eventually, new aircraft to build a
future portfolio that is cohesive and for the long-term. We are working hard on
a number of possibilities already,” added Barnes.

“It’s going to be an
exciting ride”, he added, “as we grow Falko and position it in the market as a
different type of aircraft asset manager, with a focus on meeting the needs of
underserved areas of the market as a differentiator from other aircraft leasing
companies.”

Although Falko will mainly
be providing aircraft to commercial airlines around the world, they still will
provide airframes for conversion into the Avro Business Jet and other projects.

Terry Spruce
By Terry Spruce August 4, 2011 22:27

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