HYPO Alpe Adria: A focus on Eastern Europe

[nonmember]The aircraft finance department within HYPO Alpe Adria specialises in targeting private and corporate clients in Eastern Europe, Russia and the Ukraine::join::[/nonmember][ismember]

The aircraft finance department within HYPO Alpe Adria specialises in targeting private and corporate clients in Eastern Europe, Russia and the Ukraine. Werner Slavik, head of aircraft finance, says the bank has exposure to some 50 aircraft representing a total of some Eu350 million ($500 million)

“We are strong in specific geographies and areas such as Russia and the Ukraine that can be lucrative markets for corporate and private jets,” says Slavik. “We have done some business in Western Europe but we are not big enough to compete on a regular basis. Our main focus is on Eastern Europe.”

Since the bank’s aircraft finance division was launched eight years ago it has financed some 70 aircraft in total.  “It is a robust business and one that we feel we must be in as a bank. Jets are often in the radar of clients we deal with in other contexts and it is important to be able to offer this service.”

The bulk of its portfolio comprises deals with 15 aircraft operators in various European countries including Austria, Germany and the UK for which the bank finances the aircraft. Slavik notes that while the recession has meant the importance of these operators as clients has increased, it has also meant that new deals are scarce because most are operating at capacity. Few are looking to finance new aircraft.

The majority of new business in recent years has been generated from the corporate sector or private clients. The bank generally offers purchase lease or operating lease agreements – thereby owning the aircraft and leasing it to the client. Slavik says a thorough analysis of the financial stability and assets of the client is done in each instant with guarantees usually required as security on the deal.

He says that since he completed its first aircraft deal in the Ukraine in 2005, it has had no defaults. He says this is because of its superior knowledge and understanding of the niche market in which it operates.

“The thing that sets us apart is our asset knowledge and understanding of the Central and Eastern European market,” he says. “We know the market and the people and we have especially strong expertise in Russia and the Ukraine. There is always risk but we have found comprehensive leasing structures that are clear and efficient and which work.

“We are not the cheapest and we do not have the scale of some of the other banks. But we have fantastic local knowledge and we offer a much more personal service, which I also much more efficient. We will not be working on 10 deals all at the same time. We also offer every aspect of the package needed to fund and operate an aircraft including things such as asset management insurance. We offer the whole package.”

Slavik believes the aircraft finance market remains at a low point thanks to the global economic downturn. He says that although demand is now improving, many operators are still not profitable enough to invest in new aircraft.

He admits the aircraft finance team has been scaled back during the economic crisis with staff being utilised in other departments. “But when the market returns, we will be ready to take advantage of that and offer our clients the excellent service they have had in the past.”

Werner Slavik
0043 50202 6954
[email protected]

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