Blackstone loan fund taps revival in luxury jet market

Blackstone, vying with financiers including Citigroup, is starting a new fund to provide loans for a luxury-jet market projected to reach US$280 billion over the next decade.

The fund's creation adds Blackstone, the world's largest alternative-asset manager, to a growing roster of lenders taking advantage of a business-aviation rally. The fund says it will be able to finance as much as US$2.5 billion in plane purchases and will focus on the biggest models costing US$30 million or more.

"We've seen more lenders come back into the market that had pulled out and we're seeing new ones coming in," said Wayne Starling, chief of aviation finance for PNC Financial Services Group. "The market is showing some real signs of recovery."

Companies and wealthy entrepreneurs will buy 9,450 new jets over the next 10 years, Honeywell International said in its annual forecast. Their estimated value at list prices is 7.7 per cent more than in last year's projection, as buyers gravitate to costlier, longer-range jets.

Blackstone is jumping into financing by establishing Global Jet Capital, which will handle sales of new and used aircraft, said Shawn Vick, the fund's chairman of the executive committee. Joining New Blackstone in the fund are Carlyle, Franklin Square Capital Partners and AE Industrial Partners. Global Jet Capital's executive committee includes Bill Boisture, the former chief executive of Hawker Beechcraft.

"We believe that it's going to be a strong, healthy, vibrant market," Vick said.