Ireland continues to build on its reputation as a centre of excellence for aircraft financing and leasing and its position has been further enhanced in recent years. 

“Aircraft lessors are attracted by Ireland’s favourable corporation tax regime, a wide double tax treaty network and professional expertise,” said Rory McPhillips, asset finance partner at Matheson.

“These factors combined with a government that is committed to growing and supporting the industry have made Ireland the location of choice through which to finance and lease aircraft.”

McPhillips said Ireland had also developed a vibrant aircraft securitisation industry, which allowed lessors, airlines and investors to access alternative funding from capital market sources.

“We are the law firm of choice for internationally focused companies and financial institutions doing business in and from Ireland,” he said.

“We advise the world’s leading aircraft lessors, airlines, financial institutions, private equity funds and manufacturers on all aspects of the sale, purchase, financing and leasing of aircraft, aircraft engines, helicopters, rolling stock, ships, simulators and other machinery in and from Ireland.”

According to McPhillips, the continuing strength of the aircraft finance markets is driven largely by healthy aviation industry fundamentals and balanced supply and demand for commercial aircraft.

“Air traffic is growing above long-term trends; oil prices are currently low; aircraft utilisation and load factors continue to rise; replacement demand remains strong and global airlines are producing record operating results and profits,” he said.

He said the favourable Irish legal and tax regime coupled with the deep knowledge pool continued to attract aircraft investment to Ireland.

“The Irish leasing market has been very active in recent years, with strong investment from the US, China and Japan,” said McPhillips.

“In particular, Chinese and other Asian based lessors continue to be attracted to Ireland and Matheson has advised a number of such recent market entrants on establishing their leasing platforms here.”

Matheson is a full service commercial law firm with the largest dedicated Asset Finance Group in Ireland, which works closely with the firm’s specialised Aviation Tax Group headed by Gerry Thornton.

“Our Aviation Tax Group has extensive experience in the aviation sector providing advice and analysis in respect of tax enhanced aviation financings. We can also offer the full range of Irish Stock Exchange (ISE) listing services, including investment funds and debt securities listing,” said McPhillips.

Matheson is also counsel to the Registrar of the International Registry established in response to the Cape Town Convention and Aircraft Protocol.

“We have extensive experience in advising on all aspects of the Cape Town Convention, from advising on the applicability of the Cape Town Convention and Aircraft Protocol to practical aspects of setting up entities as Transacting User Entities and carrying out registrations with the International Registry,” said McPhillips.

Recent transactions

Recent capital markets aircraft transactions that Matheson has advised on include the following:

  • In August 2016, a US$916 million ABS (asset backed securities) transaction involving 52 aircraft;
  • In May 2016, a US$349.1 million EETC (enhanced equipment trust certificate) transaction to finance ten aircraft for an airline, which represented the first public EETC for that airline. EETCs are essentially a form of corporate debt securities which rely on the credit of a single corporate issuer (usually the airline) and are secured by aircraft;
  • In June 2015, a US$1.21 billion ABS offering backed by 49 commercial aircraft. This was the largest pooled-aircraft ABS transaction in nearly a decade.

This interview appeared in The Sunday Business Post on 23 October 2016.