The individual winners of Airfinance Journal's 2017 global finance awards at the Rusty Pelican in Miami, Florida: 

Lifetime achievement award: Scott Scherer

Scott Scherer is the winner of Airfinance Journal’s lifetime achievement award for his dedication to the aviation finance sector and notably the Cape Town Treaty, which is intended to standardise transactions involving movable property on the international stage.

Scherer helped to found the Aviation Working Group, an international industry organisation dedicated to developing policies and regulations to facilitate advanced aviation financing. Under Scherer’s leadership as co-chairman, the AWG led a successful effort to develop and ratify the Cape Town Treaty. The treaty seeks to reduce risks for creditors and, consequently, the borrowing costs for debtors, by reducing legal uncertainty.

Previously Scherer led an industry coalition in successful efforts to amend Section 1110 of the US Bankruptcy Code to improve the ability of US airlines to raise aircraft financing.

He also played a leading role in negotiating a new Aircraft Sector Understanding (ASU) agreement. This international agreement establishes the terms and conditions that export credit agencies offer in support of the sale of their respective countries’ aircraft.

Scherer most recently served as the senior executive focused on policy and regulatory strategies associated with the aircraft financing mission of Boeing Capital Corporation (BCC). He was responsible for arranging, structuring and providing financing solutions to customers of Boeing products. He was appointed to this position in December 2009.

In the role, Scherer developed and oversaw BCC’s interactions with industry and government stakeholders regarding the laws, rules, regulations and policies that shape aircraft financing’s infrastructure. Previously Scherer had served as vice-president and general manager for BCC’s Aircraft Financial Services organisation, a position he held since early 2000, laying the groundwork for much of the company’s current success with aircraft financing infrastructure matters.

Before that role, he was vice-president of customer financing for Boeing. Previously, he served as director – finance and business management for Boeing’s 737/757 programmes and as assistant treasurer – customer financing. Scherer has worked in the customer financing sphere since 1977. 

Above: Kostya Zolotusky, managing director, Boeing and Scott Scherer 

Airline treasury team of the year: Gol Linhas Aereas

Brazilian carrier Gol Linhas Aereas won the prize this year as investors bought into the company’s turnaround story.

In July 2016, Gol carried out a distressed debt exchange under which investors holding $41 million of its 2022s agreed to swap their bonds for just $70 of cash and $380 of new 9.5% 2021s per $1,000 exchanged. Holders of other Gol bonds took similarly hefty haircuts, though the take-up on the exchange was low across the curve.

Eighteen months later, the Brazilian real had stabilised and the economy had exited its worst recession. Furthermore, Gol went through a restructuring that included cutting routes, negotiating with lessors to return 20 aircraft, and selling other jets.

Fitch and S&P raised its credit rating twice, ending the year at ‘B’, stable outlook, and ‘B-‘, positive outlook, respectively. In December, Moody’s upgraded Gol’s corporate credit rating by four notches to ‘B2’, stable outlook. This was clear evidence that the market begun to acknowledge Gol’s improved credit profile.

In 2017, Gol’s Ebitdar margin was an impressive 23%, up from 21.7% in 2016. The balance sheet continued to strengthen: adjusted net debt was 6x the last 12 months. Ebitdar in the fourth quarter of 2017, compared with 7.5x in 2016.

At 31 December 2017, total liquidity, including cash, financial investments, restricted cash and accounts receivable, totalled R$3.2 billion ($912 million), an increase of 66% from a year earlier.

Above: Gol Treasury team of the year

Lessor treasury team of the year: AerCap

A year after being upgraded to investment grade rating by two rating agencies, operating lessor AerCap secured the third and final major rating agency, Moody’s, as investment grade rating last year.

During 2017, the lessor continued its strategy to diversify financing and issued on an unsecured basis, via its subsidiaries, a total of $3 billion of new debt in three transactions with different terms.

At the end of the year, available liquidity totalled $9.6 billion and combined with the lessor’s operating cash flows, total existing sources of liquidity stood at $12.8 billion.

This represented 1.4 times AerCap’s cash needs over the next 12 months and cover at least 1.2x of its debt maturities and contracted capital requirements for the next 12 months.

The Aercap treasury team was led by Paul Rofe, who retired on 31 December 2017.

Above: AerCap Treasury team of the year

News event of the year: Airbus/ Bombardier CSeries investment

No one saw this partnership coming. Bombardier had a reasonable orderbook for the CSeries, but since the handover of the first aircraft, a CS100 to Swiss in July 2016, sales have disappointed.

On 16 October 2017, Airbus and Bombardier Aerospace announced a partnership on the CSeries programme, with the European manufacturer acquiring a 50.01% majority stake. Bombardier and Investissement Quebec are keeping approximately 31% and 19%, respectively.

Under the agreement, Airbus will provide procurement, sales and marketing, and customer support expertise to the CSeries Aircraft Limited Partnership (CSALP), the entity that manufactures and sells the CSeries.

Airbus did not pay for its share in the programme, nor did it assume any debt. Bombardier will continue with its current funding plan of CSALP and will fund, if required, the cash shortfalls of CSALP during the first year following the closing up to a maximum amount of $350 million.

The European manufacturer insists that the company has no plan to buy out Bombardier’s stake in the CSeries programme, and that Bombardier will remain a strategic partner after 2025.

CSALP’s headquarters and primary assembly line and related functions will remain in Quebec, with Airbus’ support. The European manufacturer’s footprint will expand with the final assembly line in Canada and US customers will benefit from a second assembly line at Airbus’s US manufacturing site in Mobile, Alabama. Airbus says it expects “to strengthen and accelerate the CSeries’ commercial momentum” and use its supply chain experience to generate “significant CSeries production cost savings”.

Above: Airbus and Bombardier CSeries partnership: News event of the year

Lessor of the year: Avolon

Avolon has been a major player in the merger and acquisition field over the past few years and its $10.4 billion acquisition of CIT Aerospace propelled the HNA-owned lessor to the top of the leasing table.

CIT Aerospace also helped to balance Dublin-based Avolon’s portfolio, 40% of which previously operated in Asia (not including China). Post-merger that share has dropped to 28%, while Avolon’s North American allocation has risen to 19% from 9%.

The lessor closed the year with $5 billion in cash and undrawn credit to protect it from any fallout from its Chinese parent’s difficulties.

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Above: Avolon team

Aviation finance person of the year: Bob Morin – Marsh

The June 2017 departure of Robert Morin from Export-Import Bank of the United States (Ex-Im Bank) to join Marsh and work on the Aircraft Finance Insurance Consortium (AFIC) product was not surprising: Ex-Im had been shut since June 2015 and there was little hope that the bank would resume its activity for commercial aircraft transactions of more than $10 million. Moreover, it also announced the return of Morin to his preferred activity: aircraft financing. Having joined Ex-Im in December 1992 as transportation division (the predecessor of aircraft finance division) counsel, he was named vice-president in 1998 and attracted a skilled team of loan officers.

Morin has been involved in more aircraft financings than anyone else in the industry.

During his time at Ex-Im, the bank provided over $100 billion of financing support for the export of more than 2,000 commercial aircraft, business aircraft and helicopters.

Morin, who served under five US presidents during his time at Ex-Im, was an architect of the government agency’s aircraft financing programme. He was instrumental in the design, development and implementation of many of Ex-Im Bank’s most successful product and process innovations, some of which became industry standards. These include the Ex-Im Bank-guaranteed bond programme, which has enabled Ex-Im to access new sources of funding under its guaranteed financing programme.

Other innovative structures engineered by Morin include SOAR loans, jet-fuel indexed Ex-Im Bank-guaranteed loans, rupee/dollar swapped Ex-Im Bank Loans and certain capital markets structures.

His next challenge is to oversee the expansion of AFIC, an insurance-guaranteed product launched by Marsh and designed for bank and capital market investors that fund new aircraft purchases from Boeing.

AFIC provides an alternative financing product for new aircraft deliveries and is underwritten by four insurance companies: Allianz; AXIS Capital; Fidelis; and Sompo International (formerly Endurance). The insurance protects the lender’s exposure to default for the duration of the loan. The terms of this insurance can be tailored to the individual purchase agreement made between Boeing, an airline, and its financiers.

Morin is Airfinance Journal’s person of the year for closing more than $1 billion of AFIC guaranteed aircraft financings in its first year of operation.

After financing Boeing aircraft for most of his life, could Morin support Airbus aircraft soon?

Above: Kostya Zolotussky, managing director, Boeing and Bob Morin

Aviation finance house of the year: Citi

This year marks the first time Airfinance Journal has recognised the Aviation finance house of the year. The award is for the financier that has made the biggest contribution to the industry over the year. Several top-tier aviation banks submitted applications for the award and deciding on a winner was a difficult decision for the judges.

Citi wins this year for finding a spectrum of financing solutions for its clients and for being active in all the key aircraft financing markets.

The US-based bank was involved in $65 billion of aviation sector transactions over the course of 2017, including $23.7 billion of bank debt, $32 billion of debt capital markets, EETCs ($3.5 billion), asset-backed securitisations ($2.4 billion), equity ($2.2 billion), and M&A ($708 million).

Not only did the bank support airlines, it also financed many leasing companies and airports, including a $4 billion financing for Mexico City airport.

“We are most proud of the depth and breadth of our business with the airlines and aircraft lessors around the world. Given our unique global footprint, with branches in over 100 countries, we have close client relationships locally,” said Thomas Hollahan, managing director and Citigroup’s global aviation industry head.

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Above: Citi team