Bain invests in Atlas’ leasing business to launch cargo JV

Titan Aviation Holdings, the leasing subsidiary of Atlas Air Worldwide, and Bain Capital Credit today announced plans to establish a joint venture to develop a freighter aircraft leasing portfolio with a valuation of approximately $1 billion.

Both companies will provide equity capital, with Bain and Titan initially contributing $360 million and $40 million, respectively. Long-term, both parties may contribute more for the purpose of growing the portfolio further – and seem likely to do so, with either Titan contributing aircraft or the respective companies contributing additional funds, to sufficiently grow the portfolio to the $1 billion value the JV expects. Apart from equity, Titan will also contribute aircraft- and portfolio-management capabilities, though breakdown of the resulting ownership structure is not yet clear.

Titan confirmed to Cargo Facts that it would be looking to identify and source aircraft for the JV on a “prospective basis,” with the aircraft to be added to the portfolio over the next several years, but added that a decision on aircraft types has yet to be made. Titan’s current portfolio, valued on the books at around $1.5 billion, consists of seven 777Fs, twenty-one 767-300Fs, one 757-200F, one 737-300F and one passenger 737-800.

Just what might a diversified $1 billion portfolio look like? Cargo Facts wouldn’t be surprised if the portfolio of the new JV consists mostly of Boeing freighters, as is the case with Titan’s existing portfolio. However, William Flynn, chairman and CEO of Atlas Air Worldwide Holdings, expressed an interest in A330Fs during this year’s Cargo Facts Symposium.

Jack Atkins, managing director transportation at Stephens, told Cargo Facts the $1.5 billion valuation of Titan’s existing portfolio is a “useful proxy” for what the JV could potentially contribute. On the earnings side, Titan currently contributes $45-50 million in annual pre-tax profits for Atlas. The new venture could generate somewhere in the ballpark of $30 million, said Atkins.

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