AIP Capital, the aviation asset management arm of Miami-based 777 partners, has raised $230m (£184.5m) from investors to finance the delivery of 7 Boeing 737 Max aircrafts, amid ongoing financial difficulties and backlogs in the sector.
The newly-launched private equity group, which operates in Dublin, London and the US, said that Citibank arranged the acquisition facility and would continue to advise, with the new Boeing jets delivered by the end of 2023.
Jared Ailstock, managing partner of AIP said that the announcement was “an early milestone for our platform. These aircraft will be both owned and managed by AIP and are a foundation for the growth of our business.”
It comes amid growing interest in the aerospace supply chain from private equity groups, who are looking to capitalise on supply chain investments.
Boeing and Airbus have struggled to boost production amid shortages in labour and the supply of parts, with smaller suppliers buckling under high interest rates.
AIP believes that private equity groups can provide a “lifeline” for the aviation sector by easing supply chain pressures through investment and accelerating delivery speeds for low-cost carriers.
Ailstock told City A.M. that “there’s really major challenges in the supply chain.”
“It’s pronounced in our industry and it’s having a material impact on the OEMs, it’s not just Boeing… it’s affecting both the aircraft and the engine manufacturers ability to deliver aircraft and really ramp up production, which is a big focus.”
“I think what we really want to do is use the expertise that we’ve developed over the years and our understanding of the importance of the supply chain and of what each of these companies do, and be able to deploy capital,” he said.
He added: “I think we’ve got some unique perspectives, and I think we can use those unique perspectives to make capital deployment decisions that are attractive to our capital base and can help us ease some of the strains in the supply chain right now.”
AIP has said that this investment in supply chains from the private equity sector could have the knock-on effect of reducing the ongoing rise in ticket fares which has plagued consumers and led Ryanair’s Michael O’Leary to proclaim last year that the era of low cost flying had ended.
Air fares for passengers across Europe saw a spike of around 20 per cent in 2023, with the average price for UK consumers rising by 18 per cent.
Last month, Ryanair announced a multi-billion pound order of 300 Boeing’s 737 Max aircrafts, ending a long dispute between the two groups over delivery delays.