Hedge funds and private equity firms are investing in airline securities backed by leases on the aircraft or the aircraft equipment, Forbes.com reports. Some are even going straight to leasing, helping to revive a sector of the asset-backed securities market that has lost popularity in the past two years.
Since traditional lenders and investors, most notably insurance firms and pension funds, began backing out of the airline industry, hedge funds have become the cash bearers to the market of aircraft-related debt.
What's in it for the hedge funds? A big "say so" in the restructuring of the bankruptcy ridden airlines they are saving. In case the airlines go belly-up, the securities are backed secured by the possession of the specialized airline assets without having to go through the courts.