KKR-Backed Altavair Inks Sale-Leaseback for Delta Airbus Planes

Bloomberg News, By Gillian Tan (May 19, 2020)

  • Delta is said to reap roughly $250 million from transaction
  • Airline is bolstering cash balance amid coronavirus pandemic

Altavair LP, a commercial aviation finance firm half-owned by KKR & Co., signed a sale and leaseback agreement with Delta Air Lines Inc. for six Airbus A321-200 aircraft, helping the U.S. airline bolster its cash balance amid the coronavirus pandemic.

The acquisition was made through Altitude Aircraft Leasing, a platform in which KKR’s credit and infrastructure funds committed to invest $1 billion. Delta will reap roughly $250 million in proceeds from this transaction, according to a person with knowledge of the matter. The potential agreement was first reported by Bloomberg last month.

“We are pleased to again have the opportunity to transact with Delta, especially during this period of economic uncertainty,” Altavair Chief Executive Officer Steve Rimmer said in an emailed statement Tuesday. “Due to our longstanding relationship with Delta, we were able to document and close on this transaction in very short order.”

Delta last month entered into sale-leaseback agreements to raise $1.2 billion from its existing fleet, and is pursuing other financing initiatives, according to a regulatory filing. The company last week reached a sale-leaseback agreement with Standard Chartered Aviation Finance for six airplanes.

The airline said it will restore some suspended routes next month and further pare its fleet as flying capacity remains 85% below a year ago. Delta shares have fallen 63% this year, compared with a 61% decline for a Standard & Poor’s index of the five largest U.S. carriers, as the pandemic has all but halted global travel.

“We are excited to work with one of the best-in-class, global airlines on their high-quality, new aircraft assets,” KKR partners Dan Pietrzak and Brandon Freiman said in Tuesday’s statement. “We look forward to supporting Delta as the airline continues to play a critical role in the global aviation industry.”

The Delta transaction increases Altitude’s portfolio to almost 40 aircraft, and follows its February agreement to acquire aircraft from Etihad Airways.

About KKR

KKR is a leading global investment firm that manages multiple alternative asset classes, including private equity, energy, infrastructure, real estate and credit, with strategic partners that manage hedge funds. KKR aims to generate attractive investment returns for its fund investors by following a patient and disciplined investment approach, employing world-class people, and driving growth and value creation with KKR portfolio companies. KKR invests its own capital alongside the capital it manages for fund investors and provides financing solutions and investment opportunities through its capital markets business. References to KKR’s investments may include the activities of its sponsored funds. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKR’s website at www.kkr.com and on Twitter @KKR_Co.

About Altavair L.P.

Altavair L.P. is an asset manager and solutions provider focusing on the acquisition of new and used commercial aircraft for leasing to domestic and international passenger airlines and cargo operators. Since its inception in 2003, Altavair has completed over $9 billion in commercial aircraft lease transactions with over 60 airline customers in 28 countries representing over 200 individual Boeing and Airbus aircraft. Altavair maintains offices in Seattle, London, and Singapore. For more information, please visit www.altavair.com.

Media Contacts:

KKR: Miles Radcliffe-Trenner, +1 212-750-8300, media@kkr.com

Altavair: Timothy O’Hara, +1 425-369-8062, timothy.ohara@altavair.com

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