Major aircraft lessor Avolon said it signed an agreement with Israel Aerospace Industries (IAI), which is endeavoring to grow as an independent freighter conversion company, to be IAI’s launch customer for their Airbus A330-300 freighter conversion program.
The deal calls for Avolon to take 30 A330-300 conversion slots with IAI between 2025 and 2028.
“We believe the IAI A330-300 P2F will be the wide body freighter of choice this decade and beyond, replacing retiring aircraft and providing the volume capacity required to meet market needs,” Avolon CEO Dómhnal Slattery said. “We identified IAI as a long-time global leader in the aircraft conversion business and the right partner for Avolon to capitalize on the unparalleled growth in e-commerce.”
The global air freight market is worth more than $150 billion annually and is expected to double over the next 20 years, Slattery continued. “This agreement signals Avolon’s intention to be a leading player in that expansion,” he said.
In May, IAI said it successfully performed the conversion of more than 260 aircraft that have accumulated over 2,500,000 operational flight hours, since their conversion. As part of the latest announcement, IAI CEO and President Boaz Levy noted two years ago IAI announced that it will be the first in the world to perform a passenger-to-freighter conversion on the B777-300ER.
“For the second time in recent years, IAI’s Aviation Group is making history,” Levy said.
The IAI deal came as Avolon announced it expanded its unsecured revolving facility by $1.1 billion to $4.3 billion and extended the maturity date from 2024 to 2026.
The company has taken other debt-management moves. It extended $2 billion of unsecured note maturities to 2027 and reduced the weighted average interest rate from 5.31% to 2.53%, and repriced a $672 million Term Loan B, reducing interest cost by 0.5%. It also repaid around $650 million of secured debt during the quarter with a weighted average interest cost of 3.93%.
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