PHOENIX, Arizona – March 2025 – Cirium’s Oliver Clark recently interviewed Al Wood, Chief Executive Officer of Aquila Air Capital, about growing opportunities for lessors to win business by offering airlines a reliable package of engine capacity at a fixed price. Al described Aquila’s new thrust-selling approach as the company seeks to expand in this direction. 

ANALYSIS: Aquila’s bid to sell thrust

Amid today’s unstable supply chains and long turnaround times for engine shop visits, there is a growing opportunity for lessors to win business by offering airlines a reliable package of engine capacity at a fixed price.

One company seeking to expand in this direction is US engine lessor Aquila Air Capital.

Founded in 2021 by Warburg Pincus, chief executive Al Wood, and Kepler Hill Capital, Aquila previously served as what Wood terms a “shock absorber” for airlines, solving short-term engine requirements when something went wrong in their operations.

“That may have been an AOG, that may have been increased turnaround times, it may be a number of things that required them to need incremental engines,” Wood told Cirium in an interview at the ISTAT Americas conference in Phoenix earlier this month.

He says Aquila wanted to take its engine expertise and expand into offering ancillary services at the “highest level”, which meant “moving away from being a financial player and just being a lessor and selling thrust”.

THRUST: THE PROCESS

Wood says the new thrust-selling Aquila approach is aimed at generating “incremental value” for customers.

“So today, we go to a customer and say: ‘We have this engine serial number, and you can lease it today for this rate.’ Tomorrow, we want to go to the customer and say: ‘You need X amount of hours or cycles of thrust for your fleet for the next 10 years. We will provide that,'” says Wood.

“And here’s how we’ll do it. We will take you out of the thrust business, and we will make a commitment to you to provide thrust on a quality, safe basis, at a cost-effective price point, more cost-effectively than you as an airline can do it.”

He says the target market for this offer is small to mid-sized airlines that don’t have economies of scale and don’t have buying power or balance sheet to leverage.

“We put 10 of them together, then they can benefit from the safe size and scale of a larger airline,” he observes.

Aquila will own all the engines and provide airlines with thrust based on pre-determined rates of cycles.

The lessor already has a number of customers that have “removed themselves from the maintenance activity of their engines”, says Wood. When they need an engine, “they call us and we provide an engine”.

He adds: “We are highly focused on their utilisation, their demand signals, so we know when demand is going to occur, so that we can start to line up engines ahead of time and provide them the thrust they need on a long-term basis.” This, he says, can help airlines with long-term cost planning.

NEW OWNERSHIP

One of the drivers of Aquila’s new approach is its new owners Wafra. The New York-based global alternative asset manager completed its acquisition of the lessor from Warburg Pincus in December 2024.

Wood says Warburg Pincus was an “excellent owner” and sponsor to initially found the business, but that three years after its establishment Aquila had two things it was seeking to accomplish.

The first was to lower its cost of capital in order to be more competitive.

“Under Warburg Pincus ownership, the good news was: we had plenty of capital. The bad news is: it was kind of expensive money, so we needed to lower our cost of capital,” notes Wood.

Secondly, given the cyclical nature of the aviation business, Aquila needed a “much more patient capital base or a more long-term investing strategy”. This, Wood explains, would allow it to deploy capital across “multiple cycles of different length, instead of being a very short- or long-term goal”.

Wafra “checks both of those boxes”, he asserts. Equity from the alternative asset manager, combined with a new debt facility from Apollo Global Management-owned Atlas SP, has reduced Aquila’s cost of capital “significantly.”

With its new strategy, Aquila will be able to move its forecasted cash flows from one year five years: “much more desirable to our investor base”, says Wood, “and clearly much more desirable to the growth of the business and how we can forecast what will look like in the coming years”.

WIDE ANGLE

In its former guise, Aquila Air was focused on engines that powered widebodies such as the Boeing 767, 757, 777 and Airbus A330. Hence, the Pratt & Whitney PW2000, PW4000 and GE Aerospace 90s were “key products”, Wood says.

The business will remain focused on the widebody space, but Wood says Aquila will also be an “opportunistic investor” in the narrowbody market.

“We see from a customer demand [point of view], much more interest in our products and service around the widebody sector than we see around the narrowbody. It looks as though there’s ample people providing this product or service to the narrowbody market. It’s really on the widebody side where they don’t have the support network they need.”

Wood says the lessor is seeking to expand into newer or mid-life technology engines, such as the International Aero Engines V2500 and CFM International CFM56-5B and -7B.

Here, Aquila can avail of a “more competitive cost base than we would have been able to do under our previous ownership”, Wood believes.

The lessor is in the process of renegotiating agreements with maintenance providers in order to “shore up our availability and access to capacity from an engine MRO perspective”, says Wood.

He describes the sourcing of assets as the “lifeblood, or oxygen” of the business. Values have of course risen amid the current shortfalls in new-technology production, but Wood says Aquila has in “most” cases been able to pass on higher asset prices in the form of increased lease rates.

GROWING THE FOOTPRINT

Most of Aquila’s operations and customer relationships are in the EMEA region, notes Wood, and the majority of its staff is in Ireland. However, the lessor has active campaigns to expand its business reach, firstly into the Americas, and then into Asia, and is staffing up accordingly.

“We do business in both of those regions today, but we don’t have the footprint that we believe we need to serve those markets adequately,” says Wood. “That’s why we’re making the investment in the Americas and in Asia sales and marketing organisations.”

Read the story on Cirium’s website

(Courtesy of Cirium)