SCB’s aviation business owns 107 commercial airliners that are leased to 26 airline clients in 20 countries, manages a debt portfolio of $5bn, and offers various financial services to its airline clients, aviation sector service companies and aircraft manufacturing clients. As of 2016 the Aviation business has been mandated to double the size of its balance sheet on a global scale.
The project involved two parts. The first part of the project focused on assessing the growth opportunity of aviation finance business in the U.S. and Canada. The team found that the aviation finance business in the Americas is promising for SCB in the next five years. Demand for aviation is fundamentally driven by economic activities and business travelers, which are both increasing. The supply side of aviation industry will also see a boom with a steady growth in fleet size and a preference of over-150-seat aircrafts in narrow body market.
The second part of the project focused on suggesting specific products to offer and airlines to target. The team recommended that SCB provides EETC products to United Airlines and American Airlines as both airlines are currently under fleet renewal plans and are likely to continue to rely on EETCs for aircraft financing. While Delta is a potential client for SCB in operating lease market, Delta has a preference for balanced fleet and has enough cash for financing. On the other hand, SCB should not consider Southwest since most of its aircrafts are likely to be financed by its own cash.