A Dublin-based lessor discovered critical portfolio vulnerabilities using our stress testing tool. Here's what they found—and how they fixed it.
Portfolio Details: 85 aircraft | €320M market value | 12 operators | 8 jurisdictions
The lessor's portfolio looked healthy: 85 aircraft spread across 12 operators and 8 jurisdictions. No single operator exceeded 15% of portfolio value. No single jurisdiction had more than 20% exposure.
But when we ran a COVID-19 stress scenario, the picture changed dramatically.
The portfolio had operator concentration risk masked by aircraft type diversification. While the lessor had 40 narrowbody and 45 widebody aircraft (seemingly balanced), 3 operators controlled 62% of monthly revenue. A single operator default would trigger a cascading revenue cliff.
1. Reduce Operator Concentration
Target: No single operator >8% of revenue. Action: Sell 12 aircraft from top 3 operators over 18 months.
2. Mitigate Jurisdiction Risk
Target: Reduce Russia exposure from 33% to 15%. Action: Redeploy 8 aircraft to Western Europe (faster repossession).
3. Upgrade Operator Credit Quality
Target: 70% of aircraft with A- or better operators. Action: Acquire 15 aircraft from tier-1 carriers (Lufthansa, United, etc.).
COVID-19 Scenario Impact
Before: €18.2M (5.7%)
After: €8.4M (2.1%)
↓ 54% improvement
Concentration Risk (HHI)
Before: 2,847 (High)
After: 1,624 (Moderate)
↓ 43% improvement
Top Operator Exposure
Before: 18% of revenue
After: 7% of revenue
↓ 61% reduction
Russia Exposure
Before: 33% of aircraft
After: 15% of aircraft
↓ 55% reduction