Private equity firm KKR has revealed a major new investment in the aircraft leasing industry, committing $1.4 billion alongside partner Altavair as supply constraints at both Airbus and Boeing continue to limit the number of planes available to airlines.
The announcement, made Wednesday, reflects a growing trend of leasing companies and private equity investors stepping in to help fund aircraft purchases. Airlines are grappling with rising operating costs and a rebound in travel demand while facing a shortage of available aircraft.
Today, roughly half of all commercial aircraft worldwide are leased rather than owned outright by airlines. KKR has now poured more than $12 billion into the aviation sector since 2015.
Altavair specializes in buying both new and pre-owned commercial aircraft and renting them to passenger and cargo airlines around the globe.
According to a source familiar with the deal, the bulk of the $1.4 billion has yet to be deployed and will be invested gradually over the next four years.
KKR intends to acquire aircraft from airlines looking to convert their fleets into cash, directly from manufacturers Airbus and Boeing, and through secondary market purchases. These arrangements typically involve buying a plane and then leasing it back to the original carrier under a multi-year agreement — giving airlines an infusion of cash while allowing them to keep flying their planes.
The firm is targeting stable, long-term lease agreements with well-established airlines and cargo operators, deliberately steering clear of distressed situations or bankruptcy cases. The source pointed to Spirit Airlines as an example of what KKR is avoiding — the carrier shut down in May after failing to secure backing for a government rescue plan.
Since joining forces in 2018, KKR and Altavair have purchased 188 aircraft and engine assets and leased them to 67 airline and cargo customers around the world.
The source noted that fluctuating fuel prices and global geopolitical tensions pose limited risk to these types of investments, since leases generally span five to ten years and generate steady, predictable returns.
KKR has a track record in this space, including a 2020 transaction with Etihad Airways in which it purchased Boeing 777 and Airbus A330 jets and leased them back to the airline as part of that carrier’s fleet overhaul strategy.
