Airfinance Journal Interview: Dynam Aviation.

Dynam Aviation Ireland, a newly established Irish aircraft leasing platform, plans to develop the business aggressively over the next three years for its parent company Dynam Japan, a Hong Kong-listed company and the leading operator of Pachinko in Japan.

In recent years Pachinko slot machine money has fed into into various parts of the aviation industry.

“Pachinko machine manufacturers and operators have been investing in aircraft financing in various ways,” says Dynam Aviation’s James McCarthy in an interview with Airfinance Journal. These are mostly tax oriented-investments, such as Japanese operating leases (Jol) and Japanese operating leases with call option (Jolco), according to him.

“It is less common for Pachinko operators. I am not aware of a Pachinko operator that has established a leasing subsidiary like Dynam has.”

“Our parent has cash on the balance sheet and has been looking at industries to invest in. One of the areas they have identified is aircraft leasing,” he adds.

“Some may have made investments through other channels with banks or funds but our parent has the unique opportunity to make a significant investment to establish a leasing platform. This is what our focus is: setting up the platform and developing the business.

“Our parent has made an equity commitment for the next three years and with our affiliate company, Sato Aviation, our target is to grow the portfolio to 30 narrowbody aircraft.”

Dynam Aviation Ireland plans to expand its portfolio to up to 10 aircraft by the end of this year.

“We do have a number of transactions in the pipeline. Between Sato Aviation and Dynam Aviation, the portfolio may increase to 10 aircraft by year-end,” says McCarthy.

The lessor acquired its first aircraft, an Airbus A320 on lease to Vueling Airlines, earlier this week. Airfinance Journal’s Fleet Tracker shows that the 2018-vintage aircraft previously belonged to DAE Capital.

Dynam Aviation and Sato Aviation are looking to grow the portfolio to 30 aircraft over the next three years.

McCarthy says the new lessor plans to acquire about 10 aircraft a year, with sale and leaseback being another channel.

“We will do a mixture of sale and leaseback transactions, primarily on new aircraft, as well as acquisitions with leases attached,” he says, adding: “The mixture will depend on the opportunities in the market that we see”.

But some portion of the deals will be similar to the Vueling acquisition, he adds.

The first aircraft was financed using the commercial debt market and the subsequent acquisitions for the reminder of the year will also be financed on limited recourse basis.

“We don’t need a warehouse facility at the moment because we benefit from a significant equity injection from our parent company. But as we grow, we will consider all options from the financial market.”

McCarthy says the lessor’s focus is primarily young narrowbodies, typically no older than five years. In rare cases the lessor also would consider widebody aircraft.

“We would only consider widebody assets with high-credit airlines where we feel confident that they will operate the aircraft for a long time.”

Dynam Aviation does not have a geographical restriction on jurisdictions but is fairly conservative at this stage.

“The business will focus on the best jurisdictions and as we add further names on the portfolio, you will see us picking the best in each country we go into.”