World Star to fund freighter conversions with Oaktree backing

U.K.-headquartered World Star Aviation plans to enlarge its converted freighter portfolio with the backing of California-based Oaktree Capital Management. [caption id="attachment_414010" align="alignright" width="500"] World Star Aviation’s funding options focus on A330 conversions, among others. (Photo/EFW)[/caption] The lessor is launching a funding program that aims to help airlines and aircraft owners participate in the cargo market at a time when capital may be hard to come by, according to World Star Aviation. The program offers access to financing methods such as sale-leaseback and senior secured and high-loan-to-value lending in an attempt to entice customers to have their aircraft converted. World Star Aviation told Cargo Facts that its new funding program will focus on conversions of A330s, 767s, A321s and 737-800s, and that it is looking at converting a few aircraft in its own portfolio, which World Star confirmed currently includes one 737-300F and two 747Fs. The lessor said growing its presence in freighter conversions had been on its radar “for a while, irrespective of COVID-19,” and that it has seen “quite a bit more interest” from airlines and lessors looking for ways to bring their aircraft back into the air. Last year, the pandemic either prompted or accelerated the entry into freighter conversions by several lessors and airlines, including an order for two A330-300 conversions from CDB Aviation. Other lessors with freighters in their portfolios, such as Vallair and Vx Capital, have already been exploring or making use of arrangements like sale-leaseback transactions for freighter conversions. Most recently, new startup Global Crossing Airlines confirmed to Cargo Facts that it will acquire four A321-200s from Finnair, sell them to Vallair and lease them back as part of a deal for ten A321Fs . Cargo Facts believes the four aircraft are units 941, 961, 1185 and 1241, and will be converted by EFW at the VT Mobile Aerospace Engineering in Mobile (BFM), Ala. Most airlines are still bleeding cash and are expected to continue sustaining heavy financial losses in at least the next year. The International Air Transport Association (IATA) forecasts that airlines will register a total net loss of $118.5 billion for 2020 and $38.7 billion in 2021. Oaktree has already invested in World Star’s other aircraft types, and last November announced a partnership with Netherlands-based Royal Schiphol Group targeting investment in airports, particularly in the U.S. As of Sept. 30, 2020, Oaktree had $140 billion in assets under its management.

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