Kieran O’Brien: Navigating the Future of Aviation Finance

Kieran O’Brien is a distinguished leader and industry veteran whose life story exemplifies resilience, leadership, and a commitment to excellence. As a partner in management consulting and a member of the specialist aviation finance and leasing practice at KPMG in Ireland, Kieran is renowned for advising some of the world’s largest aviation finance and leasing organizations on achieving world-class business efficiency and effectiveness. Additionally, he has successfully applied his skills to guide finance transformation and improve the effectiveness of finance functions across multiple industries in Ireland and globally.

The Inspiration Behind the Journey

Kieran feels fortunate to be part of KPMG Ireland, which holds a leading position in aviation finance. During his first year at KPMG, he was in the right place at the right time and worked on a major debt restructuring. This was soon followed by his involvement in the acquisition and IPO of a leading aviation finance business. With this background and leveraging KPMG Ireland’s strong market presence, he successfully developed a specialist aviation advisory team that collaborates with various companies across the globe.

Evolution in the Leadership: An 18-Year Journey

Kieran believes that over the years, he has evolved into more of a coach. “We are fortunate to have some of the best people in the world in our organization. Therefore, I believe that my role now is to empower and coach them to lead themselves,” he adds. Kieran still needs to lead, drive, and challenge when necessary; his primary focus is on empowering these exceptional individuals to succeed in the marketplace.

The Exciting Project and Endeavors: Throughout the Career

Kieran has worked on numerous significant projects, but his favorite was the acquisition of ILFC by AerCap. His company provided key support to AerCap during the post deal integration, alongside several other advisors. Kieran and his team had previously served as advisors to both companies before the transition, giving them a unique perspective on the deal. This groundbreaking transaction paved the way for AerCap to become the largest aircraft lessor in the world, marking a truly transformational moment in the industry.

On the other end of the spectrum, during a post-pandemic recovery, Kieran assisted several airlines in staying operational, which he found extremely rewarding. These airlines were built by incredible entrepreneurs, and the global crisis had a devastating impact on their operations. Supporting them through the pandemic and, in one instance, facilitating the creation of a new airline with financial systems was incredibly exciting.

Blockchain Technology: Streamlining Aircraft Financing Transactions

Several companies have emerged to leverage blockchain technology for aviation documentation, technical specifications, financing, and tokenizing transactions. While it remains uncertain which of these companies will succeed, the benefits of blockchain in maintaining accurate records and ensuring the integrity of those records are evident. This is particularly important in a sector where significant asset value is tied to technical records. However, similar to previous technological standards, the adoption of blockchain in this sector will largely depend on regulatory changes and guidance.

The Latest Trends

The biggest influence on the aviation sector is the increase in passenger numbers.

The growing global middle class and population will continue to drive both passenger volumes and ticket prices. Kieran highlights an interesting trend in the US: the monetization of reward programs and their impacts on traditional full-service airlines compared to low-cost and ultra-low-cost carriers.

Many projects are currently focused on transitioning ERP, EPM, revenue, and operational systems to the cloud. This shift has led to significant back-office transformations for airlines and other aviation companies, and the company has a significant number of projects ongoing with clients. KPMG can implement multiple ERP platforms such as SAP and Oracle, along with the practical application of AI. More importantly, the company offers real airline and aviation expertise to support this transformation, which is precisely what the clients desire.

Aviation Sector Amid Economic Uncertainties and Fluctuating Fuel Costs

The aviation sector has shown remarkable resilience despite facing significant challenges. Following the COVID-19 pandemic, which effectively grounded the global fleet, the industry was further impacted by Russia’s invasion of Ukraine. Despite these challenges, a relatively low number of companies went out of business or underwent restructuring, highlighting the sector’s robustness. Fuel costs are a critical factor that directly affects airlines’ profits and creates a ripple effect throughout the entire industry. However, airlines have become increasingly sophisticated in their financial management strategies, such as hedging, to better manage these risks.

Impact of Sustainable Aviation Fuel (SAF) on Aircraft Financing

Kieran believes that the situation remains uncertain, that the rules are clear at present, and that the reporting on ESG is evolving. The biggest concern is the industry’s ability to access SAF and eSAF at a scale and price that is feasible and does not negatively impact the consumers.

The Most Promising Technological Innovations

The transition to cloud computing and the integration of AI is expected to be transformational. These advancements will enhance the customer experience, streamline back office operations, and improve areas like predictive maintenance, route optimization, and fleet management. The AI application can improve forecasting accuracy by over 10% to 15%, raising accuracy rates to the high 90s. This level of precision is remarkable in the aviation sector, as it allows airlines and aviation companies to plan more effectively.

The Future of Aircraft Leasing: In the Next Decade

Aircraft leasing is an important sector that provides invaluable service to airlines. During the pandemic, leading companies demonstrated their value by partnering with airlines to address various challenges. Since the industry’s inception, the percentage of leased aircraft has steadily increased. As aircraft financiers, leasing companies present different types of credit risk compared to traditional airlines. They can move assets globally, which contributes to a broader distribution of risk and debt, a crucial factor in the overall financing of the sector. Overall, Kieran believes aircraft leasing looks very promising.

The Impact of New Airlines on Developing Markets

New airlines can play a crucial role in stimulating economic growth in developing markets. The emergence of these airlines fosters competition and creates additional opportunities within the aviation ecosystem, which is generally beneficial.

The Major Change Drivers in Aviation Finance by 2030

According to Kieran, the global economy will be a key factor driving change in the aviation sector over the next few years. There is a risk of an economic downturn, prompting some clients to consider transforming their back office and operations. As they want to be ready for potential changes.

Kieran’s Prediction for the Future of Aviation

Kieran believes that the aviation sector will continue to go from strength to strength. This industry is incredibly resilient and can withstand various challenges, evolving and transforming to meet global needs.