New | Avolon chief executive takes up post in Hong Kong after HNA buyout
Domhnal Slattery, founder and chief executive of Avolon, the aircraft lessor, taken over by China’s HNA in a multi-billion US dollar deal, talks about his first day on the job at his Hong Kong office
Moving to Hong Kong is only the first change for Domhnal Slattery after Avolon, the aircraft leasing firm he had founded, was taken over by China’s HNA in a deal valued at US$7.6 billion (HK$59 billion) that closed on Friday.
Slattery, 48, who will continue to be chief executive of Avolon, said he will work from Hong Kong this year for better integration with the new shareholders now that Avolon has become the core aircraft leasing brand for the aggressively-expanding Chinese conglomerate and its more than 500 aircraft.
Speaking to the South China Morning Post on his first day at the Central office where a brand-new Avolon logo had over the weekend replaced that of Hong Kong Aviation Capital, Slattery said the Chinese owner will not only bring changes to Avolon but to the industry.
HNA’s buyout of Avolon through its Shenzhen-listed unit Bohai Leasing makes the aviation and shipping group now the world’s fourth largest in aircraft leasing by asset value after Gecas, AerCap and Air Lease Corporation. It also marks the first time a Chinese company succeeded in acquiring a Western aircraft lessor, as the country’s burgeoning aircraft lessors sought to quickly rise to the top through big-ticket purchasing bids.
Slattery said HNA’s offer, at a 55 per cent price premium to Avolon’s IPO price, had materialised because the key leaders’ entrepreneurial spirit resonated well with Avolon’s, such as their boldness in putting down a US$350 million non-refundable deposit in what Slattery described as “a moment of truth” for the deal.
“They were more ambitious for my company than I was. I’ve never met anybody [like that]. So I just felt it was right,” he said.
The challenge going forward is to build trust with the new shareholder in a year for which he said his position is to be “ambitious, aggressive, but focused on risk management.”
“That challenge is further enhanced because our new shareholder is from a different culture”, he said. “‘Understand and respect each other’s culture, and not to change it is what we have agreed upon,” he said.
The aviation market in 2016 is going to be characterised by challenging conditions from global financial market volatility, flat GDP growth, and emerging market currency risks, he said. He said that the tailwind of low oil prices would do little to offset the other challenges.
“When airlines go into the defense mode, they prefer to do more operating leasing than balance sheet financing. So what we’ve learnt over the years is when the backdrop of the market is negative, the opportunity for us gets greater,” Slattery said.
