Alternative investment manager Castlelake recently announced that its aviation leasing and lending arm has fully repaid a $595 million aircraft-backed asset-backed security (ABS), the first such repayment by an aircraft ABS sponsor in several years.
"It represents the first full repayment of any operating lease aircraft ABS to be completed since the COVID-19 pandemic," according to the firm's announcement.
The transaction, Castlelake Aircraft Securitization Trust 2021-1, consisted of a portfolio of 26 commercial passenger aircraft and one freighter on operating leases with 11 different lessees in 10 countries.
"Castlerock completed the repayment approximately two years ahead of schedule using cash flow from leases and proceeds from the sale of assets," the firm said.
We don't view the ABS market as an offlay of risk, where we just park aircraft ... and clip a servicing fee.
Jake Gallagher, head of aviation capital markets at Castlelake, described the repayment as a testament to the firm's active management style, in which it took advantage of favorable market conditions to repay investors.
"We don't view the ABS market as an offlay of risk, where we just park aircraft in a [securitization] vehicle and clip a servicing fee," Gallagher said. "We're using it as an efficient source of financing, and with that our incentives are primarily to realize and return capital and make money for our investors."
The transaction represents the seventh aircraft ABS deal that Castlelake, which manages $33 billion in assets overall, has fully repaid or refinanced.
Completing three aircraft ABS deals in 2025, Castlelake launched in early February an $843 million transaction, Castlelake Aircraft Structured Trust 2026-1, its first so far this year. Castlelake Aviation Holdings (Ireland) Limited, as servicer, will be responsible for managing the aircraft, including aircraft leasing, maintenance and disposition.
Positive momentum
In a presale report, Fitch Ratings noted that a positive ratings driver is the transaction's 37 aircraft spanning 22 countries, with no single country exceeding 12% of the portfolio. The rating agency found no negative factors and listed several neutral factors, including asset quality and tiering, lessee credit risk, and transaction structure.
Fitch expects global passenger traffic to see growth trends in line with or modestly below long-term trend rates, supported by an increasing propensity to travel in emerging markets and potential improvements in North America after a soft 2025.
However, macroeconomic volatility, political uncertainty and consumer health will remain watch items, Fitch says. While aircraft supply remains tight, according to the rating agency, The Boeing Company's improving delivery reliability and increasing narrowbody production will aid airlines' planning.
