Novus Aviation could double portfolio over next 18 months, managing director says

DUBAI (Reuters) - Middle East aircraft leasing company Novus Aviation Capital could double its portfolio to $6 billion over the next 18 months through deals with airlines and other lessors, its managing director said on Sunday.

The aviation industry is facing its worst ever crisis due to the coronavirus pandemic that has decimated air travel demand, forcing airlines around the world into a cash crunch.

Dubai-headquartered Novus, however, sees opportunity to buy during the market downturn to meet demand for smaller aircraft types and certain larger, fuel-efficient jets.

It is interested in Boeing BA.N 737 MAX and Airbus AIR.PA A320neo narrowbody jets, and Boeing 787 and Airbus A350 widebodies, Mounir Kuzbari told Reuters in an interview.

“We’ve got capacity, appetite to grow the portfolio significantly over the next 18 months and ability to do at least $1 billion, $2 billion, $3 billion of new acquisitions,” he said, adding that he expected travel demand to begin rebounding in the first-half of 2021.

He said he expected the Federal Aviation Administration (FAA), and potentially one other regulator, would recertify Boeing’s grounded 737 MAX before the end of the year.

Novus, which has around 50 jets in its portfolio, was in “advanced talks” with several airlines to buy and lease back their jets, Kuzbari said, adding that the company was also interested in buying aircraft from other lessors.

The exact number of jets it adds to the fleet over the next 18 months will depend on the composition of aircraft it acquires as valuations vary.

Kuzbari said the majority of customers were paying their leases in part or full, though around 10% of Novus’ portfolio was “stressed” and a “handful” of aircraft were in storage.

However, the company sold over $1 billion in aircraft in the 12-18 months to the end of the first quarter, when many airlines stopped flying, which Kuzbari said had left it less exposed to the coronavirus crisis than some of its competitors.

Reporting by Alexander Cornwell; editing by Emelia Sithole-Matarise