Investment Management

Guggenheim Aviation Partners^SM

Guggenheim Aviation Partners, LLC targets transactions in special types of used commercial aircraft and seeks returns from current income and residual value. It benefits from downside protection by purchasing assets at or near the bottom of the industry cycle. Guggenheim Aviation Partners's principals average 21 years in the aviation industry. They have expertise in disciplines specific to effective risk management of aviation assets, including used commercial aircraft, commercial aircraft engines, and certain debt instruments secured by aviation assets. The group currently manages approximately $278 million of equity, of which approximately $220 million is invested in over 40 aircraft with an aggregate value in excess of $1 billion.

Guggenheim Aviation Partners seeks to acquire assets at discounts to base values, lease the aircraft or engines to airlines both domestically and internationally, and then sell those assets on an opportunistic basis. About half of Guggenheim Aviation Partners's activities focus on the purchase and conversion of passenger aircraft into medium- and long-haul freighters — a market that currently is underserved and is expected to benefit from near-term industry trends.

Through its hands-on approach, Guggenheim Aviation Partners precisely charts the lifecycle of each potential acquisition, negotiates the placement, conversion, and divestiture of each asset years in advance, and actively manages the process throughout.

Guggenheim Aviation Partners pursues three primary strategies:

• Purchase, conversion, and lease
• Purchase and lease
• Purchase and tear-down

In the conversion scenario, Guggenheim Aviation Partners attempts to exploit an arbitrage opportunity between the asset prices of passenger jets and the leasing terms and increasing global demand for freighters of equivalent models. In a purchase and lease, Guggenheim Aviation Partners seeks to purchase on advantageous terms planes or engines that either have an attractive lease already in place or that can be leased readily to known counterparties. The tear-down scenario offers an opportunistic or “quick flip” result, downside protection or a terminal out-year exit with flexible timing.

Articles and News

“Understanding fundamentals of aircraft financing helps in assessing present and future markets”
Air Cargo World, May 1 2006, by GAP executive officer Stephen Rimmer