Actuarial skills are transferable to the aviation finance industry, particularly in the areas of pricing and asset-liability management. Other skills such as business knowledge and good communication are essential. Typically, lessors develop “deal teams” of professionals from different areas of the company who work together to achieve the best results. The following are some key areas of interest for actuaries within aviation finance.
Pricing and Portfolio management
This involves structuring the financial elements of aircraft transactions and providing asset management for aircraft portfolios.
- Developing and maintaining financial models (typically in Excel).
- Pricing of potential opportunities and preparing reports for investors and other external stakeholders.
- Identifying potential areas to implement automation/analytical/statistical tools to improve reporting.
- Data analysis to help solve critical business problems, find new business opportunities, and turn large volumes of data into valuable, actionable insights.
- Identifying macro and micro economic trends and developing models to predict/exploit these trends.
This involves research, evaluation and model development to assist the execution of a company’s business plan.
- Forecasting business and portfolio performance and developing financial models to optimise results.
- Reporting on aircraft leases, debt structures and aircraft part sales.
- Liaising with Marketing, Legal and Technical teams to ensure accurate reporting of negotiated transactions.
- Recognising the key elements from modelling results and interpreting and evaluating these for presentation to senior management.
The Commercial team creates economic value from the models it uses and the analysis, innovations and recommendations it makes. As well as ensuring any transaction is appropriately priced and hedged, the team ensures that all the financial and risk implications of transactions are properly analysed and understood by the rest of the business.
- Provision of accurate and timely pricing, structuring and other support to transactions.
- Providing constructive input to Deal Teams.
- Providing insight to the business to enhance decision making.
This team is responsible for producing credit analysis for underlying obligors in a transaction such as airlines or lessors.
- Ongoing credit review and analysis of existing and potential lessees.
- Site visits to airlines for review.
- Presentation of transaction approval and findings from credit analysis to Board.
- Ongoing appraisal of portfolio concentrations and exposure.
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