OVERVIEW

  • We have affirmed our STRONG overall ranking on ORIX Aviation Systems Ltd. as a commercial aircraft lease servicer in Ireland.
  • The outlook is stable.
  • ORIX Aviation Systems Ltd., based in Ireland, is a wholly owned subsidiary of ORIX Corp., which is a financial services group based in Tokyo.

LONDON (S&P Global Ratings) Sept. 2, 2019--S&P Global Ratings today affirmed its STRONG overall ranking on ORIX Aviation Systems Ltd. (ORIX Aviation) as a commercial aircraft lease servicer in Ireland. The outlook is stable.

Our ranking reflects ORIX Aviation's:

  • Expertise and track record in effectively managing a diversified portfolio of aircraft leases;
  • Demonstrated ability to grow its leasing portfolio;
  • Experienced and tenured management team, complemented by ORIX Corp. support;
  • Well-established internal audit discipline, enhanced risk management, and comprehensive policies and procedures;
  • Continued investment in technology, including enhancements to its sound lease management platform; and
  • Streamlined lease administration workflows, including further enhancements to an already solid watchlist process and more proactive monitoring of lessees in financial distress or default.

The outlook is stable. In our opinion, the company has well-established lease administration operations. We expect ORIX Aviation to maintain its servicing standards at this level. The company continues to closely monitor the developments relating to the Boeing 737 MAX aircraft that was taken out of service by the Federal Aviation Administration earlier this year due to safety issues.

Since our prior review (see "Ranking Affirmed At STRONG On ORIX Aviation Systems As A Commercial Aircraft Lease Servicer; Outlook Stable," published on May 25, 2017), ORIX Aviation reported the following key changes:

  • In 2018, ORIX Aviation acquired a 30% equity stake in Avolon Holdings Ltd. (Avolon), the third-largest aircraft lessor, with backing from ORIX Corp. Avolon is a stand-alone entity that is not covered in the scope of this ORIX Aviation ranking review.
  • In November 2018, the previous ORIX Aviation deputy CEO, also acting as chief commercial officer (CCO), was promoted to CEO, which was in line with the company's succession plan; the head of sales and leasing was promoted to CCO.
  • The technical and financial asset management functions were split. Similarly, ORIX Aviation restructured the latter function, appointing several new staff members with greater experience.
  • The company appointed a dedicated team member to manage assurance and compliance, and established an enterprise risk committee to enhance oversight of the key risks facing the business.
  • ORIX Aviation became subject to Sarbanes-Oxley compliance once it became a material subsidiary of the ORIX Corp. in 2017.
  • In 2019, ORIX Aviation launched the latest version of the Leasepoint lease management system and a new human resources system. These enhancements are expected to improve efficiencies and controls.

The financial position is SUFFICIENT.

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