After more than a year's delay, Willis Lease Finance Corp. plans to bring the first-ever pooled aircraft-engine lease securitization, the company announced last week. Initially slated to come to market this time last year, the offering was subsequently derailed by Sept. 11.

Structuring agent UBS Warburg will act as bookrunner for the transaction, with co-lead managers Barclays Capital and Fortis Bank N.V. The offering comes in conjunction with a $200 million revolving warehouse facility Willis closed last Tuesday through Barclays and Fortis.

A successful pricing for this transaction could pave the way for other aircraft leasing concerns looking to offer similar aircraft-engine lease ABS. Once completed, Willis is expected to issue aircraft-engine lease ABS - which sources fully expect to develop into a bona fide asset class - on a programmatic basis.

The Rule 144A transaction - initially slated at $300 million in size - is scheduled for the fourth quarter, sources said, with the end of November targeted for settlement. While the issuer is debating whether to purchase a monoline wrap for the issue, investors will be shown a single, triple-A rated class of a yet-to-be-determined tenor.

Willis is a Sausalito, Calif.-based company that primarily leases spare aircraft engines, used either as replacements or as backups by a wide array of carriers, sources said. Individual engines can cost between $4 million and $7 million, according to Nicholas Weill, an analyst at Moody's Investors Service. The aircraft-engine lease industry tallied over $2 billion in revenue last year and is seen quadrupling by 2010.

"More than half of our lease revenues are generated in Europe, and we are very pleased to have such a prestigious group of European financial institutions working with us to fund our enterprise," said Charles F. Willis, president and CEO of WLFC. "We believe this new financing partnership signals a growing confidence in our business model, in spite of the difficult conditions currently impacting the aviation industry."

The aircraft engine leasing market has heated up, as economic difficulties experienced by the airline industry have restricted access to the capital markets, making it more difficult to raise the cash needed for the outright purchase of engines. In addition to a diverse pool of major air carriers, Willis also leases to maintenance, repair and overhaul companies, which in turn may re-lease the engines to carriers.

Arguably a more stable asset than aircraft-leases, engines retain their value down the line more so than aircraft, noted Willis COO Don Nunemaker. "As backups, our engines are not necessarily on wing'. By contrast, aircraft rarely just sit unused," said Nunemaker. With proper maintenance, the life of an engine is renewable, whereas the life of an aircraft is finite," he added. Leases generally fall into one of two maturity spectrums, short term (six months to one year) and long term (one to 10 years).

Willis competes primarily with Engine Lease Finance Corp., and to a lesser extent with General Electric Co. and Rolls Royce plc, engine manufacturers that also offer leasing. Willis has G.E. and Rolls-Royce, as well as CFMI and Pratt & Whitney-built engines in its roughly $500 million portfolio.

Each of the three competitors are likely candidates to sell engine lease-backed ABS in the future. In May of 2000, Rolls Royce Air & Engine placed $367 million of single-obligor 10-year secured debt backed by a pool of 61 engines in a joint venture with GATX. Previously, Unicapital Corp. - now bankrupt - attempted to bring an engine lease-backed ABS; however, the deal fell through.

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