1. Reviewing the information and building an independent model
We worked from three main sources: the sponsor presentation, management interviews, and raw operating data drawn from maintenance logs, lease contracts, and flight-hour reports. Using those inputs, we built an independent three-statement model that translated fleet utilization into revenue, direct operating costs, maintenance cycles, pilot payroll, and capital requirements.
The model also included scenario analysis around the variables that mattered most to the investment case, including the pace at which new flight-school customers could be added, the lease rate per hour that could realistically be achieved, and the residual values of older aircraft over time.
2. Testing the strengths of the investment case
The analysis showed that the business had a credible path to strong growth if utilization increased in line with management’s plan. Even under a more conservative case, the company still showed attractive revenue growth and strong gross margins once scale began to absorb incremental maintenance and ferry costs. Debt-service coverage also remained at a comfortable level even if lease rates came in below target, which gave the family office a degree of downside protection.
Asset quality was another positive. The fleet consisted of aircraft with good parts availability and multiple exit channels, and the assumed depreciation profile left meaningful residual value coverage against debt by the end of the forecast period. That provided a stronger asset cushion than the family office would typically expect in a similar leasing opportunity.
We also assessed the use of proceeds and found that the capital raise offered value beyond simple expansion. Refinancing legacy notes with cheaper senior debt reduced interest burden materially, while funding additional aircraft and a small maintenance base increased capacity without creating a proportionate increase in overhead.
3. Identifying the main risks and how they could be managed
The main execution risk sat around sourcing additional aircraft at attractive prices. Management’s track record in identifying undervalued units reduced some concern, but we still reflected this risk in the downside case by applying an acquisition premium. Even under that stress, the projected return remained above the family office’s hurdle.
We also looked at exposure to fuel-price volatility and policy-related demand risk. Fuel-price pressure was partly mitigated by pass-through clauses in newer lease templates, which allowed periodic pricing adjustments. On the demand side, we assessed the risk of reduced training demand and concluded that the outlook remained reasonably supported within the current operating environment.
