Seattle-area aircraft lessor Altavair on Monday announced a $1 billion agreement to buy 38 large passenger jets from Gulf airline Etihad Airways of Abu Dhabi.
Altavair will acquire 22 used Airbus A330s and 16 Boeing 777-300ERs.
The Boeing jets will be leased back to Etihad for periods of between four and 10 years. Altavair is marketing the Airbus jets, with one option being to convert them to freighters for express package carriers including Amazon.
Etihad has been restructuring after the failure of its years-long strategy to expand rapidly by building partnerships with other airlines. That left it with a large number of surplus aircraft; $1 billion for the 38 relatively young airplanes is seen as a bargain price.
Altavair, formerly Guggenheim Aviation Partners, was renamed when the management — a small team of veteran aviation professionals led by CEO Steve Rimmer — bought out the company in late 2016. At that time, the lessor managed a $3.4 billion portfolio of 55 commercial airplanes, including 30 widebody jets.
Last year, the company secured an investment of $1 billion from New York-based private equity firm KKR, which took a 50% ownership stake. That capital injection financed the Etihad deal announced Monday.
Altavair will manage the portfolio of Etihad aircraft, finding airlines that will lease them as passenger jets or converting them to freighters where it makes sense.
Of the Airbus jets, six are A330-300s and 16 are A330-200s. The latter are seen as ideal for the express package freighter market, which has been boosted by orders from Amazon as it has built up a fleet of 50 Boeing 767 freighters for its Amazon Air unit.
However, 767 passenger jets available for conversion to freighters are scarce. In an interview, Rimmer said that a fleet of 22 Airbus A330s — relatively cheaply priced and all with the same configuration so that the conversion cost would be standard — could draw strong interest in the express package market.
Rimmer said Altavair has negotiated a detailed proposal with German passenger-to-freighter conversion firm EFW, which is 45% owned by Airbus, to convert the Etihad A330s to freighters. On that basis, Altavair is now offering leases of the aircraft as freighters to various cargo operators.
Asked if Amazon is one of those, he responded, “We’d be stupid not to look there.”
Etihad’s future, including large pending orders with Boeing for both 787s and 777Xs, remains in flux. Although Boeing’s order website shows a firm order for 25 of its large new 777Xs, industry sources say Etihad feels obligated to take only six.