BAE Systems has agreed to sell its commercial aircraft lease portfolio and asset management business to investment affiliates of the Fortress Investment Group. The sale, which is expected to close in the third quarter of the year, is for a cash consideration of US$187 million, subject to certain post-completion adjustments.
Completion is conditional, amongst other things, upon regulatory approval, BAE Systems says in a statement. The business, known as BAE Systems Asset Management, is the world’s second largest regional jet lessor by fleet value and the tenth largest aircraft lessor by fleet size. It has 16 lease customers in 11 countries. Several of the lease and sale agreements were in sub-Sahara Africa, including the contract to equip Airlink, the South African regional airline, with BAe146/Avro RJ jetliners. The business is now responsible for the management of 151 commercial aircraft owned by BAE Systems, which are included within the sale, plus the management of third party owned commercial aircraft on behalf of airlines and investors.
The support and engineering activities of BAE Systems Regional Aircraft are not included in this sale. Alan Fraser, Managing Director of BAE Systems Regional Aircraft said, “We are pleased to confirm the sale of BAE Systems’ regional aircraft fleet and Asset Management business. We believe that this business will have a promising future and that we have found a buyer with the resources and expertise to support the growth of this activity.
“BAE Systems Regional Aircraft support and engineering businesses will continue to provide the full range of support to the new owner, including continuing airworthiness and engineering services. We are looking forward to continuing our close working relationship with the Asset Management business under its new ownership.”
Peter Briger, co-chairman of Fortress Investment Group and head of Fortress’s Credit business, said, “We believe that this will prove an outstanding investment for our Limited Partners, and anticipate that Regional Aircraft’s proven business model, and scalability that can support significant growth over time.”
BAE Systems Asset Management was founded in 1993 to manage the company’s portfolio of BAe 146/Avro RJ jetliners and the ATP and Jetstream turboprop airliners. Over the past 17 years to the end of 2010, the organisation has concluded more than 1800 lease, sale and other transactions, worth in excess of US$3.1 billion. The business is predominantly based in the UK and employs approximately 70 people.
Fortress is a leading global investment manager with approximately $43.1 billion in assets under management as of March 31.