Top Trends in Aircraft Financing and Leasing
CAYMAN ISLANDS AND IRELAND
Introduction
In 2025, the landscape of aircraft financing and leasing is set to be influenced by several significant trends, particularly in key jurisdictions like the Cayman Islands and Ireland. According to the International Air Transport Association (“IATA”), global airline revenues and passenger numbers are expected to reach record highs, signalling a strong sector despite ongoing challenges. In this overview, we explore the pivotal themes and trends shaping the industry, from the resurgence of assetbacked securitisations to the impact of regulatory changes and the evolving dynamics of lessor trading and mergers. The insights provided should be of interest to stakeholders navigating the complexities of aircraft financing and leasing in these important markets.
The Asset-Backed Securities (ABS) market has seen a significant resurgence, driven by stabilised interest rates and rising asset valuations and lease rates.
The Future of Aviation: Projections and Challenges for 2025
IATA anticipates multiple new industry records to be set in 2025. For the first time, global airline revenues are expected to surpass US$1 trillion and global passenger numbers are projected to exceed five billion.1
These projections from IATA suggest that the global aviation sector will remain strong throughout 2025. Even with the positive macro-economic backdrop, certain market challenges nevertheless persist. Ongoing supply chain disruptions and capacity constraints continue to hinder growth, likely leading to further consolidation among airlines and lessors in 2025.
Increased global trade protectionism, on-going geopolitical tensions and OEM equipment defects, coupled with a strong US dollar, are anticipated to put continued pressure on airline profit margins and market access. Despite these challenges, 2025 is expected to be another year of profitable growth for airlines and lessors worldwide. Strong demand for aircraft seats, coupled with a tightened supply, is very likely to create favourable conditions for aircraft owners and lessors, as aircraft values and associated revenue streams rise and ultimately stabilise.
We highlight below some key themes and trends that we are seeing across both our Cayman Islands and Irish desks as we enter the second quarter of 2025, and which we expect will remain key themes throughout the year ahead.
Resurgence of the AssetBacked Securitisation
We have seen a significant resurgence in the asset-backed securitisations (“ABS”) market, which had experienced a decline in recent years due to various global challenges. With the stabilisation of interest rates and the upward trends in both asset valuations and lease rates, investors and lessors are once again turning to ABS structures. These structures typically involve the use of Cayman/US co-issuer vehicles alongside Irish entities that own and lease aircraft.
Prominent names such as Aercap, Altavair, BBAM, Castlelake, Carlyle Aviation Partners, Dubai Aerospace Enterprise and Sky Leasing have been involved in recent ABS issuances over the past 12 months, reflecting a growing investor confidence in the sector. We anticipate that these successful issuances will set the stage for the introduction of additional new ABS structures in 2025 utilising Cayman Islands and Irish companies. In addition, aviation alternative lenders such as Volofin came to the market with successful ABS deals in 2024 and more loan ABS deals are expected in 2025.
In a market characterised by a persistent supply-demand imbalance, which is favouring increased residual aircraft values, investors can find additional reassurance in the stability of the underlying collateralised assets and the associated revenue streams.
New aviation platforms
The interest in Irish and Cayman Islands aircraft owing and leasing platforms continues into 2025. These include joint-venture platforms. We are helping new entrants to the market establish corporate platforms to finance, acquire and lease aircraft and engines. The use of Cayman Islands and Irish corporate vehicles have several distinct advantages when compared to other jurisdictions. For example, two particularly beneficial regimes exist in Ireland:
a. Trading Company AOEs – subject to 12.5% corporation tax (substance requirements); and
b. Section 110 regime – a tax neutral SPV which can benefit from tax deductions for financing expenses and depreciation.
CRD VI will prohibit thirdcountry banks from providing 'core banking services' in Ireland without a local branch.
Ireland additionally provides the below features that are very attractive to leasing companies and investors:
• Straight line depreciation of 12.5% per annum over 8 years;
• Generally, 0% VAT on international aviation leasing;
• No stamp duty or transfer taxes on disposal of aircraft assets;
• An exceptional tax treaty network with 75 double taxation treaties in effect;
• No thin capitalisation rules on SPV incorporations;
• SPVs can be incorporated within five working days; and
• Ireland is a Cape Town Convention signatory country and common law jurisdiction.
Sources of funds
We have seen a significant change in aircraft investor types in recent years, as some traditional aircraft financing banks retreated from the market. This has created further space for funds, sovereign wealth investors, private equity houses and lessors to plug the financing gap and increase market share in the finance space, with so called alternative lenders becoming increasingly prominent and evolving to be mainstream players in the market. The recent commercial settlements with insurers for aircraft situated in Russia are likely to boost investor confidence and may open additional funding opportunities, as this specific market uncertainty is now being resolved.
Update on no re-export to Russia and Belarus clauses
2025 has brought about further updates to the existing no re-export clause requirements in Ireland. On 18 December 2024, the European Commission revised its FAQ guidance on the ‘no-Russia clause’ requirements, as outlined in Article 12g of Regulation (EU) No 833/2014, which many are already familiar with.
It is important to note that from 1 January 2025, all in-scope contracts concluded before 19 December 2023 must include a ‘no re-export to Russia’ clause in accordance with the above legislation, unless the contract has fully expired.
In contrast, the ‘no re-export to Belarus’ clause requirements, as specified in Article 8g of Regulation (EC) No 765/2006, do not have the same retrospective application. These particular requirements only apply to relevant contracts entered into on or after 1 July 2024.
A number of helpful clarifications were also made in the updated FAQ guidance, including:
a. clarity as to what constitutes ‘adequate remedies’ in circumstances of a breach of the no re-export clause;
b. that intra-EU contracts do not need such a clause;
c. that the format of the clause does not need to adhere to a prescribed format, so long as the requirements of the legislation are met; and
d. that it is possible, in limited circumstances, to issue a unilateral communication where persistent difficulties arise in having the clause inserted.
Advising on sanctions in connection with settlement over Russian aircraft
We have seen an increase in advisory services to clients navigating the intricate landscape of sanctions, particularly in connection with settlements over Russian aircraft. The recent insurance settlements for aircraft situated in Russia have brought renewed focus on the importance of compliance with international sanctions. We assist clients with ensuring that their contracts and transactions comply with the relevant sanctions, mitigating legal risks and safeguarding their interests in a challenging regulatory environment.
CRD VI and Third CountryBranches – Update for Ireland
The aviation industry, and particularly non-EU based banks, should remain vigilant regarding the implementation in Ireland of the Capital Requirements Directive VI (Directive (EU) 2024/1619) (“CRD VI”), an EU-wide law which must be transposed into Irish law by 10 January 2026, with contracts entered into before 11 July 2026 grandfathered (within the parameters of same) and a full go-live date of 10 January 2027.
CRD VI will prohibit third-country banks from providing “core banking services” in Ireland (and throughout the EU) without first establishing a local branch in Ireland, authorised by the local competent authority under the CRD VI. The services covered include: (a) accepting deposits (or other repayable funds); (b) lending; and (c) providing guarantees and commitments. It is also important to note that an EU branch will not, as matters stand, be able passport its authorisation to another EU Member State.
Unfortunately, CRD VI does not provide guidance as to what constitutes providing such services “in” Ireland. While exemptions exist for reverse solicitation, intrabank and intragroup activity, these exemptions must be carefully examined on a case-by-case basis and market practice may take some time to form. The scope of grandfathering will also be subject to debate, but it would appear clear at this point that refinancings from July 2026 onwards will not be exempt.
The implementation of the full CRD VI regime in Ireland represents a significant shift from the current environment for non-EU based banks lending into Ireland, given that lending to Irish corporates was largely unregulated until now. However, there are several potential solutions available for non-EU bank lenders. These solutions include seeking branch authorisation or EU credit institution authorisation, depending on specific business needs, or alternatively, restructuring the lending arrangements. If a thirdcountry lender is not recognised as equivalent to a credit institution in Ireland, the regime should not apply. This could potentially give third-country non-bank lenders in the aviation sector a competitive edge when lending to Irish special purpose vehicles (“SPVs”) or other corporates, as they are not subject to these rules.
Increase in lessor trading, SLBs and M&A activity
We are currently witnessing a resurgence in aircraft trading and an increase in mergers and acquisitions (“M&A”) activity in Ireland. Constraints in OEM supply, combined with strong lease rates, are driving sale and lease-back (“SLB”) transactions and opportunistic trades by aircraft owners, both with and without leases attached. These have included some large portfolio sales, including the acquisition by Avolon of over 100 aircraft from Castlelake, and the acquisition by Falko of a 24 aircraft portfolio from Nordic Aviation Capital, both in late 2024.
SLBs remain one of the primary methods for lessors to acquire aircraft, especially for those without an immediate delivery pipeline, despite the highly competitive SLB environment. Lessors continue to regularise and optimise their portfolios in the secondary trading market, which was particularly active in 2024 and continues to show strong levels of activity as we enter the second quarter of 2025.
M&A activity is also progressing rapidly, with larger lessors particularly keen to scale quickly and enter different market segments, from both a technology and geographical perspective. Meanwhile, smaller and mid-tier lessors are striving to achieve scale and become attractive targets for acquisition. Many of the aircraft owning entities within these lessor structures are located in Ireland and the Cayman Islands.
Special purpose vehicle structures
The use of Cayman Islands special purpose vehicle ("SPVs") structures in aviation financing continues to be prevalent. SPVs are often utilised to isolate financial risk and facilitate the ownership and leasing of aircraft. The Cayman Islands' legal framework supports the establishment and operation of SPVs, making it a preferred jurisdiction for such structures. In addition to exempted companies and exempted limited partnerships (which remain as popular as ever) we have seen an increase in the use of Cayman Islands limited liability companies ("LLCs") in leasing structures, given the flexible nature of the vehicle which means that it is also well-suited to a broad range of general corporate and commercial applications. The LLC is closely aligned with a Delaware limited liability company. As an LLC can be member managed (by some or all of its members) or the LLC agreement can provide for the appointment of persons (who need not be members) to attend to the management of the
vehicle, there is therefore considerable flexibility, allowing the governance of the LLC to be structured to suit the parties' requirements. Cayman Islands law also provides for a Cayman Islands exempted company to be converted into an LLC, via a straightforward process. This conversion capability further enhances the attractiveness of using Cayman Islands LLCs in aviation financing and leasing structures.
Orphan structures in aircraft financing transactions
Separating legal ownership from beneficial ownership of the issued shares of the issuer, borrower or other entity in aircraft financing and leasing structures remains popular. This structuring tool is particularly advantageous in ensuring that the company involved in the transaction remains "insolvency remote." This means that the company and its assets are protected from the insolvency risks associated with a parent entity. To achieve insolvency remoteness, we are seeing that parties continue to utilise this approach whereby the company is typically structured as an "orphan" company. In this structure, the shares of the company are held by a share trustee, which is located either in the Cayman Islands or Ireland. The share trustee then declares a trust over the issued shares in the company for general charitable purposes. This arrangement ensures that the company is not directly owned by any parent entity, thereby insulating it from potential insolvency issues. Share trustee services are provided by the fiduciary services division of the Maples Group. In addition, the company may generally require independent Cayman-resident or Irish-resident directors, company secretarial services and a registered office located in the Cayman Islands or a regulated office located in Ireland, all of which can be provided by our corporate services or fiduciary services divisions.
Strong Demand for Aviation CSX Listings
In 2024, we continued to see large numbers of aviation transactions with requirements for listing notes and other securities on the Cayman Islands Stock Exchange ("CSX"). Even when the issuer vehicles are not incorporated in the Cayman Islands, many are opting to utilise the flexible and user-friendly listing regime of the CSX. This choice is driven by the process being both speedy and cost-efficient compared to other international exchanges.
Growth of Cayman Islands Transition Register
The Civil Aviation Authority of the Cayman Islands ("CAACI") continues to see significant growth in its transition register. Many lessors, in Ireland in particular, have been able to take advantage of the solution which is offered by the CAACI to lessors and financiers who require a reputable and efficient register to facilitate the temporary registration of aircraft which are in between leases or which have been repossessed. The CAACI will facilitate the temporary registration of an aircraft on the Cayman Islands aircraft register (the "Aircraft Register") until the lessor or financier is ready to return the aircraft to operational service, when the aircraft will be as efficiently deregistered from the Aircraft Register.
Lessors welcome this offering as an attractive option to protect the asset on a highly respected aircraft register, by a registry which will work proactively with the lessor or the financier to ensure that the aircraft is maintained and its certificates kept up to date thereby preserving the value of the asset. Such a process will also ensure a smooth and efficient deregistration process as well. The seamless transition both on and off the register is crucial for the CAACI.
Mary O’Neill
Partner, Dublin
+353 1 619 2105
mary.o'neill@maples.com
Sherice Arman
Partner, Cayman Islands
+1 345 814 5248
sherice.arman@maples.com
Shari Howell
Partner, Cayman Islands
+1 345 814 5551
shari.howell@maples.com
Stephen Gardiner
Partner, Dublin
+353 1 619 2733
stephen.gardiner@maples.com
Our Services
The Maples Group offers a comprehensive range of legal services across the British Virgin Islands, the Cayman Islands, Ireland, Jersey, and Luxembourg. We also provide fiduciary, fund services, regulatory and compliance, and entity formation and management services. With offices in the Americas, Europe, Asia, and the Middle East, we deliver expert advice and support across convenient time zones.
Our asset finance team collaborates globally, drawing on aviation expertise from our tax, corporate, and funds teams to provide integrated legal services. We advise aircraft lessors, financiers, funds, investors, owners, and operators, offering bespoke products and services in the aviation sector. Our services include:
• Export credit agency-supported financings for major aircraft manufacturers
• Commercial bank financings
• Asset-backed securitisations
• Airline loyalty programme financings
• Sale and lease-back transactions
• Leasing platform establishment
• Aircraft portfolio securitisations
• Lessor-supported debt transactions
We specialise in using Cayman Islands vehicles and establishing their tax residency in Ireland, thereby enhancing the security of structures and providing access to the extensive Irish tax treaty network. Our Cayman Islands and Ireland offices are experienced in Cape Town Convention matters, including provision of advice on the application of the Convention, as well as International Registry filings.
We have extensive experience in the establishment of leasing platforms so as to maximise operational and tax efficiencies.
In Ireland, our Fiduciary team recently entered into an exclusive strategic partnership with software platform Aerlytix, which enhances aviation ABS management.
Additionally, we advise on the registration of aircraft and security interests over private aircraft and corporate jets in the Cayman Islands, Ireland, and Luxembourg and vessel registrations in the British Virgin Islands, the Cayman Islands, and Luxembourg.
Our expertise in Cayman Islands insolvency and debt restructuring is unparalleled. We lead in promoting the innovative use of Cayman Islands schemes of arrangements and insolvency-remote structures in a cross-border context, meeting clients' needs costeffectively and efficiently.
Our Fiduciary teams in the Cayman Islands and Ireland provide a complete suite of services to the asset finance sector, including managing agent, cash management, investor reporting, accounting and directorship services.
In Ireland our Fiduciary team recently entered into an exclusive strategic partnership with software platform Aerlytix, which enhances aviation ABS management using data and advanced modelling, to improve efficiency, accuracy and transparency across client operations.
The Maples Group's global listings team is a recognised leader in listing services, with specialist teams in the Cayman Islands, Ireland, Hong Kong, Jersey, London, and Luxembourg, ensuring expert support for your listing needs.
REGULATED INVESTMENT FUNDS AUA IN EXCESS OF $125B+
ACTIVE STRUCTURED FINANCE VEHICLES WITH OVER $3 TRILLION IN ASSETS 7000+
LEADING SOFTWARE AND ACCOUNTING SYSTEMS
CLIENTS INCLUDE 7 OF THE TOP 10 GLOBAL AIRCRAFT LESSORS 50+YEARS IN AVIATION 50% ACT FOR OVER 50% OF LESSORS IN THE ABS MARKET
SOC1
SOC2 ACCREDITED SYSTEMS
Global Asset Finance Team
LEGAL SERVICES
Cayman Islands
Jonathon Meloy
Partner
+1 345 814 5412 jonathon.meloy@maples.com
Sherice Arman
Partner
+1 345 814 5248 sherice.arman@maples.com
Anthony Philp Partner
+1 345 814 5547 anthony.philp@maples.com
Shari Howell Partner
+1 345 814 5551 shari.howell@maples.com
Dubai
Manuela Belmontes
Joint Managing Partner
+971 4 360 4074
manuela.belmontes@maples.com
Dublin
Mary O’Neill
Partner
+353 1 619 2105 mary.o'neill@maples.com
William Fogarty
Partner
+353 1 619 2730 william.fogarty@maples.com
Stephen Gardiner Partner
+353 1 619 2733 stephen.gardiner@maples.com
London
Jonathan Caulton Partner
+44 20 7466 1612 jonathan.caulton@maples.com
Luxembourg
Yann Hilpert
Partner
+352 285 5 1258 yann.hilpert@maples.com
Singapore
Michael Gagie
Regional Managing Partner
+65 6922 8402 michael.gagie@maples.com
FIDUCIARY SERVICES
Cayman Islands
Phillip Hinds
Senior Vice President
+1 345 814 5807 phillip.hinds@maples.com
Delaware
Jeffrey Everhart
Senior Vice President
+1 302 440 3657 jeffrey.everhart@maples.com
Scott Huff
Senior Vice President
+1 302 338 9127 scott.huff@maples.com
Dublin
Stephen O'Donnell
Global Head of Fiduciary Services
+353 1 697 3244 stephen.o'donnell@maples.com
Julian Dunphy
Head of Structured Finance
+353 1 697 3231 julian.dunphy@maples.com
Jarlath Canning
Senior Vice President
+353 1 697 3294 jarlath.canning@maples.com
Mark Gordon
Senior Vice President
+353 1 697 3276 mark.gordon@maples.com
Singapore
Kasturi Majumdar
Senior Vice President +65 6922 8402 kasturi.majumdar@maples.com
