PIMCO and GE Capital Aviation Services (GECAS) announced a preliminary agreement to develop an aviation leasing platform to support up to US$3 billion in aircraft asset financing arrangements.

The transaction is subject to customary closing conditions and receipt of required regulatory approvals.

"This strategic investment platform will enable GECAS and PIMCO­-advised accounts to acquire new and young fuel-efficient aircraft to meet the needs of a diverse set of global airlines over many years," a statement released about the transaction said.

The portfolio will initially focus on narrowbody aircraft while allowing flexibility to invest in attractive opportunities in the widebody market.

PIMCO and GECAS said it will consider a range of investment criteria including an airline's assets and credit quality and also geographic factors.

The platform looks to provide much-needed financing for airlines which are looking to upgrade their fleets with young and new aircraft especially at this critical time. 

“As the airline industry struggles with the effects of the COVID-19 pandemic, the PIMCO-GECAS platform will inject essential liquidity into this critical industry by providing financing solutions at a time when there are fewer traditional financing options for airlines,” said Dan Ivascyn, PIMCO’s Group chief investment officer.

“Aircraft remains an attractive asset class in a critical infrastructure sector supported by solid long-term growth drivers. GECAS’ expertise as a world-class aircraft lessor aligns with our longstanding investment strategy in aviation finance.”

Greg Conlon, President & CEO of GECAS said this platform will ensure that “we can continue providing our airline customers with the aircraft needed to sustain their franchises.”