Commercial Aviation
AIP Capital and Monroe Capital Launch $1B Aircraft Leasing Venture
$1 billion joint venture targets mid-life aircraft leasing amid supply chain disruptions, backed by Deutsche Bank and Fifth Third Bank.
The aviation finance world has just witnessed a significant development with the announcement of a joint venture between AIP Capital and Monroe Capital. This strategic partnership aims to acquire a diversified portfolio of mid-life aircraft on long-term leases to global Airlines, with an initial investment target of $1 billion. Backed by a $500 million senior secured warehouse facility from Deutsche Bank and Fifth Third Bank, the venture is poised to capitalize on the growing demand for mid-life aircraft amid global supply chain disruptions and rising air travel demand.
This collaboration merges AIP Capital’s deep expertise in aviation asset management with Monroe Capital’s strength in private credit and asset-based finance. As the aircraft leasing market continues to expand, projected to reach $401.67 billion by 2032, this venture represents a timely and calculated move to address airline needs for flexible, cost-efficient fleet solutions. The deal reflects broader trends in private credit’s increasing role in aviation finance and the revaluation of mid-life aircraft as valuable, income-generating assets.
Monroe Capital, a $20.7 billion asset manager with a strong track record in private credit, brings institutional capital and structuring capabilities to the table. Its Alternative Credit Solutions (ACS) group has been active across sectors, including infrastructure and industrials, and now sees aviation as a “natural extension” of its platform. By partnering with AIP Capital, Monroe expands into a sector with long-term demand visibility and tangible collateral.
AIP Capital, founded in 2023, has quickly built a reputation for aviation finance innovation. With $4 billion in assets under management and operations spanning Dublin, New York, Stamford, and Singapore, the firm operates across three verticals: aviation asset management, direct aircraft investing, and private credit. Its wholly owned lessor, Phoenix Aviation Capital, has already acquired 30 Boeing 737-8 aircraft for long-term leases to airlines like LOT Polish Airlines and Flair Airlines.
The partnership structure designates AIP as the servicer of the aircraft assets, handling lease administration, technical oversight, and trading. Monroe, meanwhile, provides capital through its institutional investor network. This division of labor allows each firm to play to its strengths while jointly navigating the complexities of aircraft acquisition and leasing.
“This venture provides scalable and stable capital; critically, it enhances value to our global airline customers and lessor trading partners even as capital markets have increased volatility.”, Jared Ailstock, Managing Partner at AIP Capital
The timing of this venture is particularly strategic. Aircraft manufacturers like Airbus and Boeing are facing production delays due to supply chain issues, resulting in a shortage of new aircraft. This has elevated the value and demand for mid-life aircraft, typically those aged 12 years or older, that are now being rebranded as “mature, proven assets.”
Lease rates for mid-life aircraft such as the Airbus A320ceo have risen by more than 20% annually, with some models nearing parity with newer aircraft like the Boeing 737-800. Airlines are extending leases on these aircraft to maintain capacity, especially as new deliveries are delayed until at least 2030. The AIP-Monroe venture targets this segment to benefit from elevated lease rates and strong residual values.
Moreover, mid-life aircraft offer financial advantages. Having already undergone significant depreciation, these assets present lower capital costs while maintaining operational efficiency. Their maintenance schedules are also well understood, making them attractive to lessors and investors seeking predictable returns. The venture’s initial $500 million warehouse facility, secured from Deutsche Bank and Fifth Third Bank, allows for scalable capital deployment without immediate equity dilution. This facility supports the acquisition of aviation assets under long-term leases, focusing on portfolio diversification and lease stability.
Legal and tax advisors ensured the structure’s compliance and tax efficiency. Gibson Dunn served as transaction counsel and PwC acted as tax advisor to AIP Capital, while Milbank LLP and KPMG advised Monroe. This meticulous structuring reflects the venture’s ambition to scale while maintaining robust operational and legal governance.
By targeting multiple aircraft types and lessees, the venture aims to mitigate concentration risk and optimize residual values. AIP’s technical expertise will be instrumental in managing asset performance and maximizing lease income through potential secondary market trading, a segment that grew by 35% in 2024.
The global aircraft leasing market is experiencing a period of rapid expansion. Valued at $172.88 billion in 2023, it is projected to grow to $401.67 billion by 2032, driven by increasing air travel and airlines’ preference for leasing over ownership. Leasing allows airlines to optimize capital allocation and maintain fleet flexibility.
Europe remains the largest market, holding over 50% share in 2023, thanks to Ireland’s favorable tax and regulatory environment. However, Asia-Pacific is the fastest-growing region, fueled by the rise of low-cost carriers and expanding route networks. Narrowbody aircraft, especially the Boeing 737 MAX and Airbus A320neo families, are in highest demand, with lease rates for new models exceeding $400,000 per month.
Due to production delays, an estimated 3,000-aircraft deficit has emerged, extending the economic life of current-generation models. This has created a window of opportunity for lessors focusing on mid-life assets, which are increasingly seen as essential to maintaining airline capacity in the near term.
Mid-life aircraft are being re-evaluated in the context of ongoing supply chain disruptions and evolving airline strategies. The term “mature, proven assets” reflects their reliability, cost-effectiveness, and operational readiness. These aircraft are now central to airline fleet strategies, particularly for low-cost carriers operating in volatile demand environments.
Three main factors are driving the value appreciation of mid-life assets: IBA forecasts suggest that lease rates for mid-life aircraft will remain elevated through at least 2025, with models like the Airbus A330 and Boeing 777-300ER surpassing pre-pandemic values. This sets the stage for sustained profitability in the mid-life leasing segment.
AIP and Monroe enter a competitive but expanding field that includes established lessors like AerCap and SMBC Aviation Capital. However, their unique combination of private credit and integrated servicing offers a differentiated model. Monroe’s non-bank financing capabilities and AIP’s asset management expertise create operational agility and capital efficiency.
The venture’s initial $500 million facility provides room for rapid scaling, with additional capital infusions possible as the portfolio matures. Success will be measured by portfolio diversification, residual value retention, and secondary market activity. Analysts project the venture could capture 2–3% of the global mid-life segment by 2027, generating up to $180 million in annual lease income.
Looking ahead, the venture may expand into adjacent asset classes such as engine leasing, where similar supply-demand imbalances exist. This would further diversify revenue streams and enhance portfolio resilience.
The joint venture between AIP Capital and Monroe Capital marks a strategic evolution in aviation finance. By targeting mid-life aircraft, assets that are increasingly vital in a constrained supply environment, the partnership offers airlines access to reliable capacity and investors exposure to resilient, income-generating assets. With a scalable capital base and deep operational expertise, the venture is well-positioned to navigate market volatility and capitalize on long-term trends.
As the global aircraft leasing market continues to grow and mature, this collaboration could serve as a model for future private credit-led investments in aviation. Stakeholders should monitor the venture’s asset acquisition strategy, lease performance metrics, and potential expansion into related sectors to gauge its broader impact on the industry.
What is the goal of the AIP-Monroe joint venture? Why focus on mid-life aircraft? Who is financing the venture? What role does AIP Capital play? What are the risks involved? Sources: AIP Capital, Fortune Business Insights, IBA
AIP Capital and Monroe Capital Launch $1 Billion Aircraft Leasing Venture
The Strategic Rationale Behind the AIP-Monroe Venture
Combining Capital and Aviation Expertise
Market Timing and Asset Strategy
Financing Structure and Legal Framework
Aircraft Leasing Market Trends and Implications
Global Market Growth and Regional Dynamics
Mid-Life Aircraft as Strategic Assets
Competitive Landscape and Future Expansion
Conclusion
FAQ
The venture aims to acquire a diversified portfolio of up to $1 billion in mid-life aircraft on long-term leases to global airlines.
Mid-life aircraft offer operational reliability, lower capital costs, and strong lease rate performance due to supply chain-induced shortages of new aircraft.
Monroe Capital is providing the investment capital, supported by a $500 million warehouse facility from Deutsche Bank and Fifth Third Bank.
AIP Capital will act as the servicer of the assets, managing lease administration, technical operations, and asset trading.
Key risks include interest rate volatility, lessee credit defaults, and market shifts in aircraft values. However, the asset-backed nature of the venture provides mitigation.
Photo Credit: AIP Capital