ASIAN AIR CARGO SUPPLEMENT – Guggenheim optimistic about Asian growth

Guggenheim Aviation Partners remains optimistic about the long term growth of the air cargo market, despite the recent softening of ratesout of Asia. “A lot of capacity has come into the market and yields have been diluted as a result, however we see this as a temporary deviation from the long term positive trend given […]


Guggenheim Aviation Partners remains optimistic about the long term growth of the air cargo market, despite the recent softening of ratesout of Asia.

“A lot of capacity has come into the market and yields have been diluted as a result, however we see this as a temporary deviation from the long term positive trend given the underlying strength of the cargo demand in the region,” says Paul Newrick, GAP’s managing director.

While noting some modal shift from air to sea, he reckons that the drive to just-in-time manufacturing and the trend towards high value shipments that will need to move by air will continue.”The exact line between air and sea willnaturally move backwards and forwarddepending on many factors, but we arevery confi dent in the long term trend,”he says.

GAP, an investment management company that traces its heritage back to the famous Guggenheim family, fi rst entered the freighter market by converting an ex-Swissair MD11 in April 2004. In the same year, it was one of the fi rst backers of the B747-400 freighter conversion programme, ordering nine of the type. In addition, the company ordered six production B747-400ERFs in June 2005.

The majority of these aircraft were sold in January to Aircastle, a listed company owned by Fortress, a leading hedge fund, as part of the normal process of realising investment returns, but Guggenheim will continue to manage the -400s through the conversion process. Five have so far been delivered, with two going to Air China Cargo, two to Martinair and the most recent one to Great Wall Airlines based in Shanghai.