Abu Dhabi Investment Authority (ADIA), Irish aircraft lessor Avolon and infrastructure investor I Squared Capital have agreed to establish a new aviation investment platform, combining sovereign and institutional capital with aircraft leasing expertise as airlines struggle to secure new planes amid a prolonged manufacturing backlog.
The joint venture, named Constellation Aviation, is expected to acquire an initial portfolio of 22 aircraft from Avolon with a current market value of USD 1.4 billion once the transaction closes.
The aircraft have an average age of about five years and are leased to 17 airlines across 15 countries, giving the new platform an immediate stream of contracted rental income.
The partners have not disclosed the financial terms of the joint venture or the size of the equity commitments. A source familiar with the platform told Reuters that Constellation aims to grow its portfolio to about USD 6 billion over time.
The transaction remains subject to regulatory approvals and will be supported by a syndicated debt facility arranged by a group of international banks.
Avolon will retain a minority equity interest and act as Constellation’s exclusive aircraft manager and servicer. It will be responsible for leasing, technical oversight and asset management, allowing the new venture to draw on an established operating platform rather than build its own infrastructure.
The arrangement gives ADIA and I Squared exposure to aircraft assets and the long-term cash flows generated by leases, while allowing Avolon to expand its asset-management business and recycle capital tied up in aircraft.
The transfer of the 22 planes will also provide Avolon with a new source of funding for future purchases and growth.
Khadem AlRemeithi, executive director of ADIA’s infrastructure department, described aircraft leasing as a resilient sector supported by structural demand for modern aircraft.
The authority invests on behalf of Abu Dhabi’s government and has a long-term mandate across global asset classes, including infrastructure, private equity, equities and fixed income. Its participation brings patient capital to a business in which aircraft are typically leased over several years.
Gautam Bhandari, co-founder, managing partner and global chief investment officer of I Squared Capital, said aircraft manufacturers’ order books stretched a decade or more into the future, leaving airlines reliant on lessors with scale and access to delivery slots.
Avolon’s large order book with Airbus and Boeing would give Constellation access to aircraft and a platform for origination and servicing, he said.
The venture is being formed as airlines face aircraft shortages and delivery delays. Boeing and Airbus have large order backlogs, while constraints involving engines, components and production capacity have limited the pace at which new aircraft enter service.
Airlines seeking to expand or replace older planes are increasingly turning to leasing rather than relying solely on direct purchases.
Lessors own or manage a substantial share of the global commercial fleet, allowing airlines to add capacity without paying the full purchase price. Leasing can help carriers manage balance sheets and adjust fleet sizes, although lease payments create long-term obligations and expose lessors to aircraft-value, financing and airline credit risks.
Avolon, headquartered in Dublin, is the world’s third-largest aircraft lessor. It had an owned, managed and committed fleet of 1,092 aircraft as of September 30, serving 138 airlines in 62 countries. The company is a subsidiary of China’s Bohai Leasing.
In October, it ordered 250 aircraft from Airbus and Boeing, with options for another 100. Its total commitments rose to 749 aircraft, alongside 561 it owns, Reuters reported.
The scale of Avolon’s order book is central to Constellation’s expansion plans. Access to future deliveries could allow the platform to acquire additional aircraft and lease them to carriers. The partners have not set a timetable for reaching the reported USD 6 billion portfolio target; the initial 22-aircraft transfer is the only seed portfolio announced.
The deal reflects a wider trend of institutional investors partnering with established lessors to share the capital requirements and risks of owning fleets.
In 2025, SMBC Aviation Capital and investors agreed to acquire US rival Air Lease in a USD 7.4 billion transaction through a newly established entity.
Other regional players are pursuing similar structures. Dubai Aerospace Enterprise has announced aircraft investment partnerships with US investors, including a venture with Neuberger Specialty Finance targeting up to $6 billion in assets. Such arrangements appeal to sovereign wealth funds and infrastructure investors seeking long-duration income.
I Squared Capital, headquartered in Miami, manages more than USD 60 billion in assets and invests across transport, energy, digital and other infrastructure businesses.
The firm has offices in Abu Dhabi and several financial centres. Its investment in Constellation extends its transport exposure into commercial aviation, where asset values and airline credit quality are central to returns and long-term portfolio management expertise.
The deal will include syndicated debt. BNP Paribas, Credit Agricole CIB, Societe Generale, ING, Mitsubishi UFJ Financial Group and Mizuho are joint lead bookrunners; Mizuho is also financial adviser to the investors.
The deal’s success will depend on aircraft utilisation, reliable airline tenants and funding costs.
Newer aircraft attract demand because of fuel efficiency, but lessors remain exposed to airline failures, lease renegotiations and shifts in second-hand values.
For ADIA and I Squared, the platform offers exposure to aviation’s long-term growth without requiring them to develop their own aircraft leasing operations.
For Avolon, it creates another channel to monetise its fleet and leasing capabilities while retaining control of aircraft management.