ST Aero enters a new conversion and lease joint venture

ST Aerospace and Wings Capital Partners formed a 50/50 joint venture, WingStar Pte. Ltd., to acquire aircraft for lease, conversion, and part out. There is much of interest to the air freight community here, and we start with ST Aero’s partner in the deal…

Wings Capital Partners, an affiliate of Wings Capital Partners Management LLC, was formed just last month by leasing business veteran Stephen Hannahs and New York-based boutique investment firm Two Sigma Private Investments. Mr. Hannahs is well-known as the co-founder of Aviation Capital Group (ACG), which grew under his leadership to become one of the world’s leading aircraft lessors, with a portfolio of over 250 aircraft placed with over 90 airline customers worldwide. ACG has been active in the narrowbody conversion market, choosing to have 737-300s/-400s and 757-200s converted to freighter configuration, either for a specific end user, or on speculation. Mr. Hannahs retired as CEO of Aviation Capital Group at the end of last year (although he remains on its Board of Directors).

When it was launched on 7 October, Wings Capital Partners (WCP) announced that it would, among other things, “seek to purchase mid-life and end-of-life aircraft where the WCP team has relationships with counter-parties, equipment knowledge or a market view.” The company also said that Christopher Dennis-Meyer, who worked with Hannahs at ACG and most recently served as Senior Vice President of Intrepid Aviation, has joined WCP as Senior Vice President and Partner.

The new WingStar joint venture between Wings Capital Partners and ST Aerospace (through ST’s wholly owned subsidiary ST Aerospace Resources, or STAR) has a mandate that is in part identical to that of WCP – “to build up a portfolio of mid-life and end-of-life aircraft assets.” However, ST went on to say that the WingStar portfolio would “initially include Airbus A320 and Boeing 737NG families of aircraft,” and further that WingStar would “leverage Wings Capital Partners’ extensive relationships and experience in deal sourcing, financing, leasing and marketing, alongside ST Aerospace’s comprehensive technical expertise in airframe, engine and component maintenance, repair and overhaul, aircraft tear-down, parts trading, passenger-to-freighter conversion, as well as aircraft inspection and technical asset management.”

Given all of the above, it seems almost a certainty that ST Aero will soon launch a passenger-to-freighter conversion program for either the A320 Family or the 737NG Family. Whether this will be done independently, or in cooperation with the manufacturer is unknown, but we point out that ST has worked with Boeing in the past (on the original 757 -200 conversion program for DHL, and more recently as a conversion facility for the MD-11F and 767-300BCF programs), and is now working very closely with Airbus and EADS EFW on the engineering development of the A330 Family P-to-F conversion program (in fact, as part of the A330 agreement, ST bought a 35% stake in EFW)

And on the subject of the A330 P-to-F program, we note that according to a report in Airline Economics, while the initial two WingStar portfolio purchases will be five A320s and five 737NGs, “the 757 and A330 are major targets of the venture.”

WingStar is expected to commence operations by early 2014, with ST Aero President Chang Cheow Teck as CEO and Stephen Hannahs as Chairman.