From the Cockpit: MONTE Aircraft Leasing goes green

MONTE Aircraft Leasing is partnering with industry leaders to develop green technology to support sustainable short-haul lift.

The London-based leasing company announced a deal with U.K.-based RVL Aviation in May for a ZeroAvia ZA600-powered Cessna 208B Grand Caravan. ZeroAvia hopes to obtain certification for the ZA600 propulsion system from the U.K. Civil Aviation Authority and deliver the aircraft to RVL by the end of 2026, the developer recently told Cargo Facts .

[caption id="attachment_57289476" align="aligncenter" width="1840"] MONTE Executive Chairman Raymond Eyre, left, and Chief Operating Officer Timothy Eyre, right. (Courtesy/MONTE Aircraft Leasing)[/caption] MONTE was initially established to support green technology assets as a financing and leasing affiliate of U.K.-based Montrose Global before the companies merged last year.

In addition to working with ZeroAvia and Ecojet in 2023 to decarbonize regional aviation in the United Kingdom, MONTE has collaborated with developers of sustainable solutions globally, including Ampaire , Cranfield University and Regent .

Cargo Facts caught up with MONTE Executive Chairman Raymond Eyre and Chief Operating Officer Timothy Eyre to discuss the lessor’s plans to support development and implementation of green propulsion and surrounding infrastructure into the regional freighter sector. What follows is an edited version of the conversation.

Cargo Facts : What led to the launch of MONTE Aircraft Leasing in 2021?

Raymond Eyre: It came from a company called Montrose, which was set up by Bank of America in 2001.

I ran the global leasing business at Bank of America from 1988 to 2001, and then was asked to set up Montrose, where I managed a commercial aircraft portfolio valued at $13 billion. I bought Montrose from Bank of America in 2010 and began looking at financing smaller aircraft in the passenger and cargo space predominantly because we saw a niche in that marketplace which seemed to develop during the Bank of America days when we had a lot of aircraft in the portfolio which had come to the end of their useful life in the United States and found homes for the assets in Africa, Latin America, Asia, etc.

Montrose became an interesting conduit for those kinds of aircraft and therefore … we developed this expertise in financing smaller turboprops and regional jets. The marketplace in general tends to shy away from financing those kinds of assets, which was good for us, but obviously presented challenges in terms of raising our own capital, so most of our transactions were funded by family offices, small investment banks and some of our personal funds.

CF : Yet you continued to stick with that niche?

RE: About four years ago, we suddenly saw this could be an advantage for us, and that clearly the smaller turboprops could potentially develop into alternative propulsion systems, be it pure electric, electric-hybrid or electric-hydrogen. And that's when we made the conscious decision to set up MONTE, which stands for Montrose Electric. MONTE is a pure energy transition vehicle, technology agnostic, but we don’t assume the risk of developing the technology. We're working with OEMs who are not of the stature of Boeing or Airbus. They’re smaller companies seeking ways to raise capital. We’re involved in both looking to retrofit existing assets, such as a Caravan, Twin Otter, Archer, into whatever technology platform our clients decide is right for them.

One thing we quickly learned is not one size fits all as we also look to finance and lease new clean-sheet design aircraft for both passenger and cargo, which we hope will obtain aviation certification in the next one or two years. We’ll see, because there’s a lot of capital required for these assets to be certified, and that's an issue right now, at least over here in Europe.

Timothy Eyre: We see a massive role and an important role for the infrastructure that’s required to operate these aircraft. Across the technology space, whether it be electric, electric-hybrid or even hydrogen, there is a requirement for electric charging infrastructure, battery storage and hydrogen production. We see that as key to the successful operation of these aircraft, so we want to enable that technology to come to market and that infrastructure to be developed.

MONTE will also provide financing for either the airline directly, airports or an intermediary to help support that infrastructure. When we offer financing options to an airline, we often look to package it together, providing a turnkey solution for the airline or operator, so that they can come to us and get a full suite of services for technology and aircraft.

[caption id="attachment_57289472" align="aligncenter" width="758"] (Courtesy/ZeroAvia)[/caption] CF : How does MONTE minimize technology risk?

TE: The key thing is that we’re not looking to take technology risk. We will only support or finance a conversion or a new clean-sheet aircraft once it has been fully certified and approved for operations. That's really key for us in all of our agreements and finance conditions. It’s subject to certification. That means we’re one stage removed from that process, which we all know can be challenging and [we] have seen a number of companies ultimately not make it. On top of that, we have been in this market for such a long time.

Ray mentioned our experience and history. Over the last fifteen-plus years, we’ve almost exclusively been focused on the regional or sub-regional turboprop market. So, we really know in detail what the operators are looking for, what’s important to them and which technology would help them actually be successful. I think having that alignment of interest, where we’re not pushing a technology onto an operator, and only doing it as and when it’s appropriate for them, is really important, allowing us to try and maximize the chances of success and minimize some of those potential risk factors around the technology side.

RE: A number of transactions we have are on existing technology with the ability to retrofit somewhere down the path. For example, with the RVL transaction, we leased the Caravan to RVL with a conventional PT6 engine, so we’re getting revenue, they’re generating revenue, and the lease starts. When the technology, as Tim described, has been certified, we then allow the aircraft to be retrofitted and start again from there.

CF : How will the appetite for investment in green technology evolve in the next five to ten years?

RE: I think it would be a challenge. Obviously, there’s been a lot of investment in the so-called eVTOL sector and not all of those investments have gone well. And unfortunately, that’s kind of spilled over into this sector a little bit because people don’t always distinguish the difference between an eVTOL and a CTOL. Hopefully it will change. We want it to change, but I’m just kind of worried that given the kind of recent issues people have found in the eVTOL sector and the losses they’ve taken, it may take some time for that to refresh.

Once you start seeing aircraft flying and people are enjoying the experience, making lots of money and saving lots of money in terms of fueling, then I think attitudes will change, but we’re probably a few years away.

CF : What does the MONTE lease portfolio look like in the next ten years?

RE: We do see a predominance of Caravans, only because everyone is focused on certifying the technology first, and we see new clean-sheet designs such as the Beta Alia 250 potentially being part of our portfolio going forward. We hope it will be a fairly represented mix of, let’s say, 70% retrofit aircraft and 30% new clean-sheet design, but that’s a pure guess at this stage. That’s our dream, our vision.

We’ll see how things shape out over time, but certainly the Caravan will be the focal point initially, and there are lots of Caravan operators that utilize freighters.