Thursday 9 July 2026
By Dickon Harris, Editor at Ishka & Grace Hardy, Analyst at Ishka
See more market insights at https://ishkaairfinance.com
PIMCO president – ‘the tide will go out’ for older aircraft demand
Christian Stracke, president of PIMCO, says values and returns for older aircraft investments are set to drop, which is why High Ridge Aviation (HRA), the commercial aviation asset manager that PIMCO helped launch in 2022, will continue to invest primarily in latest-tech assets. As of December 2025, HRA had a total fleet of 36 managed aircraft.
As more capital flows into aviation, competition for aircraft investments is intensifying. Against this backdrop, Stracke argues that disciplined underwriting and a focus on higher-quality assets will be key to delivering resilient returns through the cycle.
Stracke adds that the increasingly “crowded nature” of the commercial aircraft space has seen investors search for yield by agreeing to buy lower quality credits or assets.
“The survivors in this space will be the ones that don’t reach for yield. They may not generate the highest returns upfront, but they’ll perform better through the cycle. At some point, there will be a recession, and when the tide goes out, demand for the oldest aircraft won’t be there.”
PIMCO is one of the largest fixed income aviation debt investors and was a pioneer investor in many aircraft ABS and EETC transactions. One of the appeals of establishing High Ridge was that it created a platform to originate and manage leased aircraft assets, while also providing access to financing channels such as the ABS market.
High Ridge launched its inaugural ABS, Phantom 2026-1, in January 2026, with $538.54 million of series A notes and $64.63 million of series B notes. The notes were secured by a pool of 16 aircraft leased to third-party operators, with a weighted average age of 4.1 years.
“We’ve been investing in securitised credit for a long time, so when we bring an aircraft ABS transaction to market through the HRA platform, investors know the assets have been through a disciplined underwriting process,” says Stracke.
“That has helped us achieve attractive financing costs on the senior notes.” PIMCO confirmed to Ishka that more ABS transactions are expected from High Ridge. “What we’ve seen so far this year is that, barring an extreme breakout in oil prices, the aviation industry has been pretty resilient,” he adds.
The History of High Ridge
High Ridge was launched in November 2022 by former GECAS CEO Greg Conlon following AerCap’s acquisition of GECAS. Its creation was partly shaped by the end of PIMCO’s planned Gilead sidecar partnership with GECAS. Announced in 2020, Gilead was intended to build a leasing platform with up to $3 billion of predominantly new-aircraft assets, but the AerCap-GECAS merger ultimately brought the venture to an end.
While PIMCO remained a significant investor in AerCap’s debt, the firm chose to continue pursuing its original business model. “We had a very constructive dialogue with AerCap and understood that the partnership did not fit their business model,” says Stracke.
Using dedicated client capital, PIMCO backed the creation of High Ridge Aviation, a leasing and lending platform focused primarily on young, current-generation aircraft assets. HRA is owned by PIMCO clients through PIMCO-managed funds, providing “a level of independence that our clients would want,” says Stracke.
Targeted assets – returns vs risk
As more capital enters the aviation space, Ishka notes that many investors seem to be accepting lower returns from their equity aviation investments. Ishka research suggests that unlevered returns for many aircraft assets have dropped in the last 18 months, and that while investors still acquire some aircraft assets with unlevered returns in excess of 13% or 14%, many younger, current-tech narrowbody aircraft assets are falling below 10% unlevered returns.
Stracke says that in aviation, “and any other sector for that matter,” PIMCO targets the “higher quality, more resilient” part of the market. While there are lower returns at the peak of this market, PIMCO focuses on “a better risk-adjusted return through the cycle, meaning less downside risk and fewer losses,” with additional returns generated by optimising financing, including securitisation.
In terms of assets, this means acquiring mostly newer to midlife narrowbodies. Stracke mentions that PIMCO is pivoting “as hard as it can” to new-build aircraft, but that it still believes in the tightness of the current-tech asset market.
To date, PIMCO has launched several investment vehicles associated with the High Ridge platform.
A ‘race to scale’
One of the key questions for any lessor is growth and how it plans to acquire more assets. To date, High Ridge has grown mostly through a mixture of aircraft trades and some airline sale/leasebacks, including Breeze, GOL and Air Canada.
Ishka notes that more funds are entering the space with larger equity commitments. Several have now exceeded $1 billion in direct equity commitments. It’s a “race to scale,” explains Stracke. “An operating platform needs scale to drive profitability. Going forward, it’s going to be much more about adding value across operational excellence and across financing, and both of those need diversification and scale of the portfolio,” he adds.
One potential area of growth is direct lending. ABS investors have warmed to aircraft loan securitisations as an asset class. On the direct lending side, Stracke says the long-term plan is to build out LR AirFinance as a key part of the capital stack that PIMCO provides to its financing partners.
“LR AirFinance, High Ridge Aviation’s aviation lending and debt financing platform, complements the firm’s leasing activities by providing secured financing solutions across the aviation ecosystem”.
For now, however, leasing remains the priority, as “the returns on equity have been more interesting in the leasing space than the loan securitisation space.”
Another potential area of growth is expanding into adjacent asset classes. Stracke points to aircraft engines as an example, noting their resilience as an asset class and suggesting that PIMCO could potentially invest in engines through one of its broader multi-strategy funds. He also highlights opportunities beyond aviation, particularly in European defence infrastructure.Europe is “really underserved” when it comes to defence MRO facilities, Stracke says. He notes that investments in defence-related infrastructure could be supported by the security of long-term government offtake agreements, creating asset-backed financing opportunities with durable cash flows.
The Ishka View
Stracke recalls that one of his first major aviation investments at PIMCO involved buying ILFC bonds during the global financial crisis, which ultimately repaid at par. PIMCO has continued to buy aviation fixed-income debt, including various airline loyalty programme securitisations during the pandemic.
However, High Ridge remains PIMCO’s direct equity investment platform in aviation. Together, High Ridge and LR AirFinance provide capabilities across both aircraft ownership and financing, echoing elements of the integrated model previously employed by GECAS.
Stracke suggests that aircraft leasing currently offers more attractive returns than loan securitisation and remains the primary focus of activity.
PIMCO continues to support the growth of the High Ridge platform. According to Stracke, the strategy appears likely to remain focused on latest-technology aircraft and stronger airline credits, reflecting a deliberately conservative underwriting approach. The appeal of this approach is that it could help mitigate downside risk through the cycle. This focus on stronger airline credits appears to have insulated High Ridge from much of the recent disruption stemming from the recent rise in fuel prices, which has affected parts of the aviation market.
Moving forward, PIMCO’s breadth of capital may also create opportunities to invest in adjacent aviation asset classes, such as engines. The possibility is there, but it is not clear when that may happen.
