GATS will revolutionise how aircraft assets are traded and financed
GATS is the latest buzz word in aircraft financing and leasing circles. The development of GATS which stands for Global Aircraft Trading System will revolutionise how aircraft assets are traded and financed. This is particularly important for many Irish companies as Ireland is the global hub for aviation finance and more than 50% of the aircraft leased to airlines globally are owned by Irish companies. A&L Goodbody (ALG) was appointed as the Irish law firm to work with the Aviation Working Group (an industry body made up of the world's largest aircraft leasing companies, financing banks and manufacturers) to help create GATS which will be a system to modernize aircraft trading and financing and reduce current inefficiencies in these transactions.
“We are the leading Irish aviation firm when it comes to innovations like this within the industry,” said ALG's Aviation Finance Partner, Marie O’Brien. “This is the latest development within aircraft finance and leasing, using technology to simplify buying and selling aircraft. Currently it can be very time consuming and costly to trade aircraft and to novate the aircraft lease agreement between the owner and the leasing airline, but GATS will put everything online and use trust structures to simplify transfers. Ireland has a long history of being at the forefront of new innovations within the industry and this is another excellent example." David Berkery, another aviation finance partner at ALG has been particularly heavily involved in GATS and has worked on drafting the Irish law GATS standard form documents.
ALG has been involved in the aircraft leasing sector since the very start noted O’Brien. “We are one of the first firms with expertise in this area and our practice has grown from strength to strength,” she said. “We are very proud to be highly regarded in this space and of our reputation of being at the forefront of innovation and complex finance transactions”
ALG's aviation team is the largest dedicated team in Ireland, with six partners and a large group of associates and solicitors. O’Brien said “We provide Irish law advice, focusing on leasing companies, investors and banks. Our firm offers a full range of services, from initial set up to advising on transactions to acquire, finance and trade aircraft along with other full service disciplines such as tax, employment and corporate advice.” The strength of ALG's aviation partner bench is unrivalled among the other Irish law firms. As well as O'Brien the other aviation finance partners are, Catherine Duffy, Seamus O 'Croinin, Maireadh Dale, David Berkery, all based in Dublin, and Maria McElhinney in New York. They advise on award winning and market leading transactions for the top aircraft players in the industry.
“We’re very happy that we have maintained a dominant position on ABS (Asset Backed Securitisations) transactions over the past number of years,” said O’Brien. For aircraft lessors, access to the capital markets is a crucial component of their capital structure. “Capital market aircraft financing structures are very large and complex,” she said. “We are involved in nearly all of the ABS transactions that feature Irish incorporated and/or tax resident entities in their structures. Joint ventures and acquisitions are also a real strength of ours.”
ALG is seeing a huge amount of growth in Asian markets. Chinese investment into the EU has grown significantly in recent years, across all sectors, with many Chinese corporations using Ireland as the gateway into Europe. O'Brien also leads ALG's China Business Group. “We run an innovative programme - our Chinese Lawyer Programme which is the only one of its kind in Ireland,” said O’Brien. “It sees Chinese lawyers from its leading firms working with ALG in Dublin, as well as our lawyers working in China. We have around 80 alumni senior lawyers who have come over to Ireland. They have a really positive experience and become more aware of the strengths Ireland offers. Ireland's dominance in the aircraft leasing and finance sector and the success of the Chinese companies who have set up here has sent a very strong message to Chinese companies about the potential Ireland offers for investment not just in aviation but across a range of sectors. Aircraft leasing has definitely opened the door and been an excellent way of showing how Ireland can excel."
Ireland prides itself on its business friendly environment. Its success in the aviation industry has sprung from the culture of innovation created by GPA and that leading experts in the area are based here in Ireland. The Government and particularly the IDA (Ireland's inward investment agency) have been excellent in promoting Ireland as a jurisdiction for investment. An industry representative body called Aircraft Leasing Ireland (ALI) was established last year to be the voice of the industry and is a very welcome development for ensuring Ireland continues to thrive as the centre of aircraft leasing and finance.
O’Brien said that when she started out in the sector many of the leasing companies were smaller entities. “Now these companies are very strong employers and are fully developed corporates in their own right,” she said. “This means that they need more help and guidance with corporate governance, compliance and specific areas like employment law and data protection and they need an Irish law firm with strength across the board."
In order to maintain their strong position, ALG is committed to ensuring the next generation of aviation professionals are able to access the industry. "Investing in talented people who are attracted to this sector is best achieved through education at the undergraduate and postgraduate level. We are heavily involved in the Law Society of Ireland’s Diploma in Aviation Leasing and Finance and participate as lecturers and panel speakers,” said O’Brien.
She continued, “Awareness of the career opportunities that aviation offers has started to increase and aviation is now being included as a module at third level. This is crucial in terms of longevity for the sector in Ireland. At ALG we are increasingly getting applications from people who have an educational background in aviation. Students are making the smart decision that this is a growing industry where their career can flourish.”
O’Brien is very positive about the industry’s future and Ireland’s place in it. “Stability here, the positive tax environment and availability of top talent means that Ireland is retaining its place as a key jurisdiction for aviation,” she said.
For queries in relation to this topic or any other aviation finance matter please contact Marie O'Brien, Partner at A&L Goodbody or your usual A&L Goodbody Aviation & Transport Finance contact.
This article first appeared in the Sunday Business Post written by Lorraine Courtney on Sunday 17 November 2019.
Date published: 19 November 2019