Aviation ABS: Why the Right Managing Agent Matters Now More Than Ever

Aviation Asset Backed Securities ("ABS") have re emerged as a pivotal funding channel for lessors and airlines, following a period of market dislocation in 2022–2023. Issuance is returning, investor confidence is rebuilding and structures are becoming more sophisticated.

Recent market signals underscore this shift. Industry participants observed that aviation ABS activity slowed sharply through 2022–2023, but momentum began to rebuild in 2024 on the back of improving airline profitability, stronger asset values and the first wave of interest rate cuts across the U.S., U.K. and EU, conditions that supported renewed deal flow and investor interest. In 2025, the market has continued to reopen, exemplified by transactions such as Carlyle Aviation Partners’ AASET 2025 1 , the first commercial aircraft ABS issuance of the year, which utilised an innovative master trust framework to finance a diversified aircraft portfolio, an explicit sign of structural evolution as well as demand.

The Market Backdrop

Passenger volumes have rebounded to near pre pandemic levels, with September 2025 surpassing 2019 levels by approximately 6%. This growth ultimately improves the cash flow stability that underpins lease backed securitisations, while simultaneously boosting investor appetite for the asset class. This recovery has been linked with stabilising credit ratings across aviation ABS and more constructive pricing dynamics as issuance returned during 2024. At the same time, the transaction pipeline has broadened, spanning aircraft portfolios and engine heavy deals, with portfolios skewing progressively younger, another indicator of market health and sponsor optionality.

Aviation ABS provides liquidity to lessors and airlines, enabling fleet growth and modernisation while transferring asset risk to capital markets investors, which aids balance sheet resilience. As the sector recovers and airline utilisation improves, ABS becomes an effective tool to finance both new and used aircraft, while aligning risk and return across investor tranches. Market outlooks anticipate continued growth in aircraft ABS issuance over the long term, supported by rising air travel demand, fleet renewal and evolving investor participation, an environment where transparent structures and disciplined administration are paramount.

The Master Trust Model

Structural innovation has also kept pace in the Aviation ABS market. Since the incorporation of Carlyle Aviation Partners’ AASET 2025 1 , sponsors are increasingly exploring master trust models to enable repeat issuance of a single platform, promoting execution efficiency, cross series transparency and portfolio level risk management, benefits valued by both issuers and investors.

Unlike in traditional single-issuance aircraft securitisations, assets within a master trust are not ring-fenced to an individual note issuance, instead, all series share an interest in the entire asset pool. Operating under a hub-and-spoke model, the master trust serves as a central repository of assets, while different note series with varying terms, tranches, and payment priorities are issued as needed over time, providing issuers with long-term financing flexibility and economies of scale.

Beyond these benefits, the master trust framework offers significant flexibility for ongoing portfolio growth. It allows aircraft of any size or value to be incorporated into the trust as part of a new note issuance, making it particularly appealing for smaller lessors. For many of these market participants, portfolios consisting of just one or two aircraft are not large enough to support a standalone securitisation. The master trust solves this by providing an efficient funding platform for incremental acquisitions.

Importantly, the structure also gives issuers the ability to re-leverage seasoned assets. After several years of amortisation, they can issue additional notes secured by aircraft already owned within the trust, effectively unlocking value and recycling capital to support future growth.

Why a Managing Agent Matters in Aviation ABS Transactions

A managing agent plays a crucial role in safeguarding the operational integrity and stability of an Aviation ABS. As structures become more complex, especially under master trust platforms, the need for disciplined, ongoing oversight becomes central to investor confidence. The managing agent ensures that the underlying aircraft or engine collateral is properly monitored, that financial and operational covenants are adhered to and that any triggers, tests or requirements under the transaction documents are consistently enforced.

Equally important is the managing agent’s coordinating function. They act as the central point of communication between trustees, servicers, lessors, investors and other transaction parties, ensuring that reporting is accurate, information flows smoothly, and any issues are promptly escalated and resolved. Without this centralised oversight, even well‑structured ABS platforms can experience operational weaknesses that impact performance.

How We Can Help

At Cafico International, we have extensive experience acting as managing agent for complex, multi‑jurisdictional Aviation ABS transactions. Our team is well‑versed in the operational, reporting and governance obligations that underpin these structures, and we deliver the disciplined oversight, transparent communication and consistent coordination required to support the long‑term integrity and performance of each transaction.

In this role, we monitor collateral performance, enforce compliance with the covenants and operational requirements set out in the transaction documents, and ensure that all stakeholders receive accurate, timely and comprehensive reporting. With deep aviation expertise and a strong governance framework, we provide the level of stewardship expected by arrangers, lessors, investors and other transaction parties.

While managing agent services form a core part of our offering, Cafico International also provides the full range of trust and corporate services necessary for the establishment, operation and ongoing administration of Aviation ABS structures. From entity formation and regulatory compliance to fiduciary oversight and cash management, we support each transaction with the rigour, transparency and reliability required in today’s aviation finance environment.

For more information on the above, or to find out how Cafico International can assist your business, please contact Niamh Manning, Client Relationship Director.