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Avolon Prices US$850 Million Senior Unsecured Notes Due 2031

Avolon completes US$850 million senior unsecured notes issuance, raising over US$4.5 billion in unsecured capital during 2025.

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This article is based on an official press release from Avolon.

Global aviation finance company Avolon has announced the successful pricing of a private offering of US$850 million in senior unsecured notes. According to the company’s official statement released on December 3, 2025, this transaction represents the final major financing activity of a prolific year, bringing Avolon’s total unsecured capital raising for 2025 to over US$4.5 billion.

The newly priced notes carry a coupon of 4.700% and are set to mature in 2031. This issuance underscores the lessor’s ability to access liquidity at competitive rates, following a series of credit rating upgrades earlier in the year. The offering is expected to close on or about December 11, 2025, subject to customary closing conditions.

Transaction Overview and Financial Terms

The notes were issued by Avolon Holdings Funding Limited, a wholly owned subsidiary, and are fully and unconditionally guaranteed by Avolon Holdings Limited. In its disclosure, the company outlined that the proceeds from this offering will be utilized for general corporate purposes, which may include the repayment of outstanding indebtedness.

Key financial details provided in the announcement include:

  • Principal Amount: US$850 million
  • Interest Rate: 4.700%
  • Maturity: 2031 (approximately a 5.5-year tenor)
  • Closing Date: Expected December 11, 2025

The notes are being offered to qualified institutional buyers under Rule 144A and to non-U.S. persons under Regulation S. As is standard for such private offerings, the notes have not been registered under the U.S. Securities Act.

Strategic Context: A Record Year for Capital Raising

This December issuance caps a highly active fiscal year for the Dublin-based lessor. Avolon has consistently accessed the debt markets throughout 2025 to extend its maturity profile and diversify funding sources. According to data released by the company, the aggregate unsecured capital raised this year exceeds US$4.5 billion.

The company’s funding timeline for 2025 highlights a strategy of frequent market engagement:

  • March 2025: Priced US$850 million of 5.375% notes due 2030.
  • May 2025: Secured a US$1.0 billion unsecured bank facility.
  • July 2025: Priced US$650 million of 4.900% notes due 2030.
  • September 2025: Priced US$1.25 billion of 4.950% notes due 2032.
  • December 2025: Priced US$850 million of 4.700% notes due 2031.

AirPro News Analysis: Improving Cost of Debt

Analyzing the coupon rates across Avolon’s 2025 issuances reveals a positive trend for the company’s cost of capital. The interest rate on senior unsecured notes has compressed from 5.375% in March to 4.700% in December. This reduction signals tightening spreads and robust investor demand for Avolon’s debt.

We attribute this improved pricing power largely to the credit rating upgrades Avolon received in May 2025. Following those adjustments, the company now holds a BBB (Stable) rating from Fitch and a Baa2 (Stable) rating from Moody’s, while S&P revised its outlook to Positive. These investment-grade metrics are critical for lessors seeking to maintain low borrowing costs in a capital-intensive industry.

Operational Scale and Market Position

Avolon’s financial activities support a massive operational footprint. As of late 2025, the company reports an owned, managed, and committed fleet of over 1,100 aircraft. This scale allows the lessor to play a pivotal role in global airline fleet renewal.

In the third quarter of 2025 alone, Avolon placed orders for 90 new technology aircraft, reinforcing its growth trajectory. The company is currently owned 70% by an indirect subsidiary of Bohai Leasing Co., Ltd., and 30% by ORIX Aviation Systems.

“The net proceeds from the offering will be used for general corporate purposes, which may include the repayment of outstanding indebtedness.”

, Avolon Press Release, December 3, 2025

Frequently Asked Questions

When will the transaction close?
The offering is expected to close on or about December 11, 2025.
What is the interest rate on the new notes?
The notes carry a coupon of 4.700%.
How much capital has Avolon raised in 2025?
Including this transaction, Avolon has raised over US$4.5 billion in unsecured capital throughout 2025.
Who owns Avolon?
Avolon is 70% owned by a subsidiary of Bohai Leasing Co., Ltd., and 30% owned by ORIX Aviation Systems.

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Photo Credit: Avolon

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Technology & Innovation

Collins Aerospace Completes 1MW Hybrid-Electric Powertrain Test

Collins Aerospace finishes SWITCH project lab testing of a 1MW hybrid-electric powertrain, advancing Clean Aviation goals for single-aisle aircraft.

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On July 22, 2026, Collins Aerospace announced the successful completion of integrated lab testing for a 1-megawatt hybrid-electric powertrain subsystem, marking a critical milestone in the European Union’s Clean Aviation SWITCH project. The technology will now transfer to Airbus for aircraft-level integration, advancing the development of microhybridization for next-generation single-aisle commercial aircraft.

In a press release issued during the Farnborough International Air Show, the RTX business unit confirmed that the testing took place at The Grid, its electric power systems laboratory in Rockford, Illinois. The subsystems operated successfully alongside simulated aircraft and engine systems. The initiative aims to reduce fuel consumption and emissions by at least 30 percent compared to 2020 state-of-the-art aircraft, aligning with the broader goals of the Clean Aviation Joint Undertaking.

Powertrain specifications and the SWITCH project

The testing at The Grid involved an 800-volt powertrain and two 1-megawatt class motor generators integrated into a simulated Pratt & Whitney Geared Turbofan (GTF) engine. According to reporting by Aviation Week, the total power of the turbine engine being hybridized is approximately 20 megawatts, while The Grid laboratory itself possesses an 8-megawatt total power capacity.

The four-year SWITCH project, launched in January 2023 with a budget of £67.6 million ($77.1 million), represents a collaborative effort involving Collins Aerospace, Airbus, Pratt & Whitney, GKN Aerospace, and MTU Aero Engines. Kristin Smith, Vice President of Electric Power Systems at Collins Aerospace, noted the scale of the achievement.

“This is the largest integrated systems test conducted at The Grid since its opening in 2023,” Smith stated in the company release. “By combining our technology expertise with deep industry collaboration, we are demonstrating how hybrid-electric systems can significantly reduce fuel consumption for next-generation aircraft.”

Transitioning to the LEIA project and Airbus integration

With the SWITCH testing phase complete, focus now shifts to the Airbus-led Large scalE Integration demonstrator of hybrid electrical Architecture (LEIA) project. Preliminary work for LEIA began in December 2025. Collins Aerospace will act as the technical lead for energy sources, supplying scalable electric motor generators, electronic controllers, and power distribution equipment.

Future testing for the LEIA project will span multiple European sites, including facilities in Toulouse, France; Frankfurt, Germany; Cork, Ireland; Rome, Italy; and Solihull, United Kingdom. Aviation Week reports that ground demonstration tests are planned for 2027 at Airbus facilities in Toulouse, utilizing a modified Airbus A400M iron bird test rig.

The technology centers on microhybridization, which allows for power extraction, insertion, and transfer between the high- and low-pressure shafts of the engine. This capability can be utilized for taxiing, takeoff power boosts, and transient operating conditions. Aviation Week identifies this system as a leading candidate for Airbus’s next-generation single-aisle aircraft concept, known as the eAction.

“One of the advantages of hybrid-electric propulsion is not to have this power takeoff wasted, but to use it,” Pierre Durel, Project Officer at Clean Aviation, told Aviation Week.

AirPro News analysis

We view the successful integration testing at The Grid as a strong indicator that microhybridization is maturing from a conceptual framework into a viable hardware pathway for the mid-2030s single-aisle replacement cycle. The €4.1 billion Clean Aviation Joint Undertaking is heavily incentivizing European and US aerospace manufacturers to collaborate on these transitional technologies. By targeting a 2030 timeline to reach Technology Readiness Level (TRL) 6, the consortium is aligning its development schedule precisely with the anticipated launch windows for the successors to the Airbus A320neo and Boeing 737 MAX families. The ability to extract and insert power dynamically across engine shafts offers a pragmatic step toward emission reductions without requiring the immediate leap to fully electric-aviation or hydrogen propulsion systems.

Sources: RTX

Photo Credit: RTX

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Defense & Military

GE Aerospace and Shield AI Complete X-BAT Engine Test

GE Aerospace and Shield AI complete AVEN thrust-vectoring nozzle testing on the F110-GE-129E, keeping X-BAT on track for late 2026 first flight.

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GE Aerospace and Shield AI have successfully completed integration, actuation, and engine light-off testing of a multi-axis thrust-vectoring nozzle on an F110-GE-129E engine, clearing a major propulsion hurdle for the X-BAT vertical take-off and landing combat aircraft.

Announced in a July 20, 2026, press release, the testing took place at GE Aerospace’s operations site in Peebles, Ohio. The campaign represents the first fully integrated test of the Axisymmetric Vectoring Exhaust Nozzle (AVEN) hardware and control systems since its original development in the 1990s. The successful light-off keeps the X-BAT program on schedule for a planned first flight in late 2026.

Resurrecting thrust vectoring for vertical flight

The AVEN system pivots engine exhaust in three dimensions, providing the precise directional control required for the aircraft to balance on its tailpipe during vertical takeoff and landing (VTOL) maneuvers. Originally designed in the 1990s, the AVEN program accumulated 73 hours of ground testing and 135 flight hours across 95 flights on an experimental F-16 before being shelved.

Shield AI and GE Aerospace are now adapting that legacy hardware to meet the demands of modern autonomous flight. The integration requires the nozzle to execute rapid, coordinated movement sequences driven by Shield AI’s flight control software.

“The AVEN is what makes vertical flight possible on a platform this size and this capable. We’re applying it differently than it was ever used before. Vertical flight requires fast gimbaling to maintain attitude control, a demand the original program never had to meet,” said Armor Harris, Senior Vice President of Aircraft Engineering at Shield AI.

Harris noted that utilizing hardware with a proven track record allowed the engineering teams to bypass the initial stages of clean-sheet development. The next phase of the program will focus on iterating the propulsion approach to reduce weight and increase speed for future variants.

Scaling the X-BAT for contested environments

Shield AI unveiled the X-BAT in Washington, D.C., on October 21, 2025. The aircraft is designed as a Collaborative Combat Aircraft (CCA) capable of operating independently or as a drone wingman in contested airspace. By November 5, 2025, Shield AI and GE Aerospace had signed a Memorandum of Understanding to collaborate on the platform’s propulsion, selecting the F110-GE-129 engine paired with the AVEN system.

The aircraft relies on Shield AI’s Hivemind autonomy software to conduct missions without traditional runway infrastructure. According to reporting by Tectonic Defense, the X-BAT measures 26 feet in length and features a 39-foot wingspan. Naval News estimates the platform will achieve a range exceeding 2,000 nautical miles and an operational ceiling of 50,000 feet, positioning it for both austere land bases and potential naval integration.

Amy Gowder, President and CEO of Defense & Systems at GE Aerospace, stated that pairing the company’s propulsion scaling experience with Shield AI’s vehicle development allows the program to move rapidly from concept to fielded capability.

AirPro News analysis

We view the successful light-off of the AVEN-equipped F110 as a validation of Shield AI’s strategy to integrate mature subsystems rather than developing bespoke hardware. The GE Aerospace F110 engine family has accumulated 11 million flight hours. By pairing a highly reliable, mass-produced core engine with a previously flight-tested 3D vectoring nozzle, the X-BAT program significantly reduces its technical risk profile.

The primary challenge moving forward will be software integration. While the AVEN hardware is proven, the 1990s-era actuators were not designed for the continuous, high-frequency gimbaling required to stabilize a tail-sitting VTOL aircraft in turbulent conditions. Shield AI’s Hivemind system will need to manage these actuation limits carefully to prevent mechanical fatigue while maintaining attitude control during the critical transition between vertical and forward flight.

Sources: GE Aerospace

Photo Credit: GE Aerospace

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Commercial Aviation

MSC Air Cargo Orders Five Boeing 777-8 Freighters at Farnborough

MSC Air Cargo placed a firm order for five Boeing 777-8 Freighters at the 2026 Farnborough Airshow, joining 80+ total orders for the type.

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MSC Air Cargo has placed a firm order for five Boeing 777-8 Freighters, expanding its dedicated air logistics network with the manufacturer’s newest widebody cargo aircraft. The transaction was formally announced on July 21, 2026, during the Farnborough International Airshow in the United Kingdom.

In a press release issued by The Boeing Company, the manufacturer confirmed the five aircraft were previously attributed to an unidentified customer on its official order book. The acquisition marks the first 777-8 Freighter order for MSC Air Cargo, the aviation subsidiary of ocean shipping giant MSC Group, as the company transitions from outsourced flight operations to building its own internal fleet.

Fleet expansion and operational shift

According to FreightWaves, MSC Air Cargo currently operates seven Boeing 777-200 Freighters. Four of these aircraft are operated on the company’s behalf by Atlas Air, a partnership that began when MSC launched its air cargo division in 2022.

The remaining three 777-200 Freighters are operated internally. Aviation Week reported that MSC Air Cargo secured its own European operating authority in 2024 after purchasing the Italian freight carrier AlisCargo. The addition of the 777-8 Freighters will build upon this existing all-Boeing widebody fleet.

Jannie Davel, chief executive officer of MSC Air Cargo, stated that the order represents an investment in the long-term future of the company and its customer base.

“The 777-8 Freighter gives us the efficiency, range and capacity to serve our customers reliably for years to come, while advancing our commitment to more sustainable operations. It is the right aircraft for the next stage of our growth,” Davel said.

The Boeing 777-8 Freighter market position

Boeing noted in its announcement that widebody freighters currently fly approximately 75 percent of global air cargo capacity. The 777-8 Freighter is positioned to capture replacement and growth demand in this high-capacity sector.

With this transaction, MSC Air Cargo becomes the third Europe-based air cargo operator to select the 777-8 Freighter. Boeing has accumulated more than 80 total orders for the aircraft type to date.

Brad McMullen, Boeing senior vice president of commercial sales and marketing, noted the aircraft will connect the operator’s hubs to key international markets. He described the 777-8 Freighter as the most efficient aircraft in its class, designed to enhance the reach of global air networks.

AirPro News analysis

We view MSC Air Cargo’s transition from an unidentified customer to a named buyer for the Boeing 777-8 Freighter as a clear indicator of the maritime logistics sector’s continued encroachment into dedicated air freight. When MSC Group launched its air division in 2022, relying on Atlas Air provided a low-risk entry into the market. The subsequent acquisition of AlisCargo in 2024 and this direct order for next-generation widebody freighters demonstrate a strategic shift toward full vertical integration. By operating its own aircraft, MSC is positioning itself to capture high-value e-commerce and specialized freight yields directly, bypassing traditional air cargo intermediaries and securing long-term capacity control.

Sources: The Boeing Company

Photo Credit: The Boeing Company

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