By Aviation Tribune

Boeing marked a milestone today as the first 737 MAX 9 made its debut in front of thousands of Boeing employees.  The 737 MAX 9 is the second member of Boeing’s industry leading 737 MAX family, with a maximum capacity of 220 passengers and a range of 3,515 nautical miles

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Employees are seen here, towing the plane outside of the Renton hangar. (Photo: Boeing/Marian Lockhart)  

The airplane now begins system checks, fueling and engine runs on the flight line. Once completed, the airplane will begin flight testing in the coming weeks, the final phase of verification of the operational characteristics and overall performance of a new airplane.

“The 737 MAX team continues to do a fantastic job getting us to these important milestones right on schedule,” said Keith Leverkuhn, vice president and general manager of the 737 MAX program, Boeing Commercial Airplanes. “Our primary focus is delivering an aircraft that has the legendary reliability our 737 customers depend on, plus the optimized flexibility and range capability they desire.”

The 737 MAX 9 is scheduled to enter service in 2018. The 737 MAX 8 is on track to deliver to customers in the second quarter of 2017.

 The plane is seen here outside of the Renton hangar. (Photo: Boeing/Marian Lockhart)

The 737 MAX family has been designed to offer customers exceptional performance, flexibility and efficiency, with lower per-seat costs and an extended range that will open up new destinations in the single-aisle market. The MAX 8 and 9 will be followed in 2019 by the smaller MAX 7 and higher capacity MAX 200, while studies and discussions continue with customers on growing the family.

The 737 MAX is the fastest-selling airplane in Boeing history, accumulating more than 3,600 orders to date from 83 customers worldwide.

According to Boeing, the following airlines and leasing companies have ordered the Boeing 737 MAX 9: Aeromexico, Air Canada, Air Lease Corporation, Alaska Airlines, Aviation Capital Group, Avolon, Copa Airlines, Icelandair, Lion Air, Okay Airways, TUI Group, Turkish Airlines, United Airlines and WestJet.

The portfolio of A320 family and B737-800 aircraft have an average age of four years and are on lease to thirteen lessees in twelve countries.

PARIS, June 18, 2013 /PRNewswire/ -- PARIS AIR SHOW -- Aviation Capital Group (ACG) has selected Pratt & Whitney PurePower PW1100G-JM engines to power 12 firm A320neo aircraft. Deliveries are scheduled to start in 2018. Pratt & Whitney is a division of United Technologies Corp. (NYSE: UTX).

"We are pleased to add these Pratt & Whitney PurePower PW1100G-JM-powered Airbus A320neo aircraft to our growing portfolio of over 260 single and twin-aisle commercial jets. These new fuel-efficient aircraft will enhance ACG's position as a preferred fleet strategy solutions provider to airlines worldwide," said Denis Kalscheur, ACG chief executive officer.

"We look forward to our PurePower PW1100G-JM engines supporting ACG's customers with reliability and operational efficiency," said Todd Kallman, Pratt & Whitney Commercial Engines president.

Each of the twelve ACG Airbus A320neo family aircraft will be powered by two PurePower engines. Pratt & Whitney has announced orders for more than 3,500 engines that include announced and unannounced firm orders, plus options. The PurePower family of engines uses an advanced gear system allowing the engine's fan to operate at a different speed than the low-pressure compressor and turbine. The combination of the gear system and an all-new advanced core deliver the improvements in fuel efficiency, environmental emissions and noise.

Headquartered in Newport Beach, Calif., ACG is a global commercial jet aircraft leasing and asset management company. Founded in 1989, it is actively engaged in aircraft acquisition and leasing to airlines worldwide. ACG also provides asset management services for aircraft investors and institutional clients.

Pratt & Whitney is a world leader in the design, manufacture and service of aircraft engines, auxiliary and ground power units, and small turbojet propulsion products. United Technologies Corp., based in Hartford, Conn., is a diversified company providing high technology products and services to the building and aerospace industries. For updates from United Technologies Corp.'s aerospace businesses visit www.utcaero.com or follow @UTC on Twitter.

This release includes "forward looking statements" concerning anticipated business opportunities that are subject to risks and uncertainties, including with regard to the programs described in this release. Risks and uncertainties that could cause actual results to differ materially from those anticipated or implied in forward looking statements include the effect of economic conditions in the markets in which we operate, including financial market conditions, and fluctuation in interest rates, commodity prices and foreign currency exchange rates; levels of end market demand in the aerospace industry, including levels of demand for the new aircraft described in this release; levels of air travel; financial difficulties of commercial airlines; the financial condition of suppliers; and challenges in the design, development, production and support of advanced technologies and new products and services. For information identifying other important economic, political, regulatory, legal, technological, competitive and other uncertainties, see UTC's 10-K, 10-Q and other reports filed with the SEC.

PR Newswire

SEATTLE, Jan. 2, 2013 /PRNewswire/ -- Boeing announced today an order by Aviation Capital Group (ACG) for 60 737 MAX airplanes. ACG's order, consisting of 50 737 MAX 8s and 10 737 MAX 9s, was finalized in December 2012. The 737 MAX has now accumulated more than 1,000 orders to date.

"This order is a major step in building our broad portfolio of modern, fuel-efficient airplanes," said Denis Kalscheur, chief executive officer of ACG. "The 737 MAX enables us to offer our customers airplanes that provide the fuel efficiency, reliability and passenger comforts needed to grow in tomorrow's marketplace." The order, worth $6 billion at current list prices, further illustrates the strong demand for the 737 MAX in the airplane leasing industry.

"We are proud of the confidence that ACG has placed in the 737 MAX," said John Wojick, senior vice president of Global Sales, Boeing Commercial Airplanes. "The 737 MAX will deliver to ACG's customers unsurpassed efficiency in the single-aisle market as well as improved environmental performance."

The Next-Generation 737 is the most fuel-efficient and reliable single-aisle airplane today with an 8 percent per-seat operating cost advantage over the nearest competitor. The 737 MAX builds on these strengths with advances in fuel-efficiency and environmental performance. Equipped with new LEAP-1B engines from CFM International and improvements such as the Advanced Technology Winglet, the MAX reduces fuel burn and CO2 emissions by 13 percent while maintaining the 8 percent operating cost advantage over future competition.

These efficiencies have powered the 737 MAX to the impressive order milestone. With ACG's order, the 737 MAX has orders for 1,029 airplanes from airlines and leasing companies worldwide.

"Reaching 1,000 orders in just over a year's time from our first order validates the exceptional value the 737 MAX offers our customers," said Bob Feldmann, vice president and general manager, 737 MAX. "Customers are expressing confidence in our ability to deliver improved performance on schedule."

Contact: Tim Bader North American/Leasing Communications 425-717-0672 tim.s.bader@boeing.com

 
Contact:
Aviation Capital Group
Tennyson Oyler, 949-219-3248
TOyler@aviationcapital.com
ACG's CEO Steve Hannahs authored a two page article on Preparing for a Post-Recovery Aviation Industry which appeared in Jetrader magazine's March-April 2010 issue. Click here to download the article.

From Commercial Aviation Online

By Laura Mueller

Aviation Capital Group (ACG) plans to come to market with an $850-$900 million capital markets transaction, backed by the Export-Import Bank of the United States (Ex-Im) to help finance the lessor's new Boeing 737 Next Generation aircraft.

In an innovative structure, ACG as the launch lessor, will issue 12-year notes to finance 22 737-700 and -800 aircraft scheduled to be delivered during the next two years.

Once completed, the deal will signal a major turn in the stubborn aviation-finance market, which has been battling dwindling funding sources and rising liquidity costs. Whether this is a one-off transaction or an indicator of more such deals to come remains to be seen.

ACG already has received final Ex-Im Bank approval for 12 Boeing 737-800 aircraft that will be delivered this year and preliminary Ex-Im Bank approval for the remaining 10 737-700 and -800 aircraft next year.

"We think the market is ready for this structure," says ACG CEO Stephen Hannahs, speaking exclusively to CAO. "It will help improve liquidity in the market for aviation and open up a new investor class."

The structure of this note issuance has traditionally not been done for various reasons. "The success of the FDIC [Federal Deposit Insurance Corporation] guaranteed note programme has demonstrated the market's appetite for this type of instrument, " Hannahs says. "Because an Ex-Im Bank-guaranteed note commits the 'full faith and credit' of the U.S. Government, we believe the capital markets will find an Ex-Im Bank-guaranteed note to be very attractive."

The structure contemplated in this instrument has been created with the assistance of the investment banks and Ex-Im.

According to Ex-Im, this financing vehicle could significantly lessen the financing squeeze in aviation, which has resulted in wider spreads in bank transactions.

"Ex-Im Bank believes use of this structure will contribute to maintaining jobs in the U.S. aircraft manufacturing industry by opening up new sources of more competitively priced funding for Ex-Im Bank guaranteed loans," says Ex-Im's transportation division vice president Robert Morin. "We believe use of this structure provides better value to the US taxpayer as it has the potential to maximize the value of the Ex-Im Bank guarantee."

Ex-Im Bank is also working on a similar deal with an airline customer, Emirates Airlines, which is due to be launched at the roughly same time as ACG's financing. The airline's guaranteed bond will finance three Boeing 777-300ERs.

Before the credit crunch, Ex-Im Bank guaranteed financings priced at Libor flat or 5-10 basis points over, but now those same deals close at Libor plus 100 to 130 basis points.

Hannahs is hopeful that in time with an educated market this financing will trade at levels similar to Federal Deposit Insurance Corporation paper, or in the Libor plus 40-75 basis points range.

ACG says it has not decided on the final issuance format, but there may be a benefit in a series of smaller issuances to educate the market. The lessor is hopeful with each successive issuance the spreads will narrow.

"We anticipate going out with a smaller deal, whetting investor appetite to build market acceptance and then return later with a larger offering," says Madhu Vijayaraghavan, SVP finance, ACG.

As in typical export credit structures, 85% of the financing will be supported by Ex-Im Bank, while the remaining 15% equity will be supplied by ACG.

Airbus and Boeing have long been cheerleading for a capital-markets structure, backed by export-credit support, to increase the flow of liquidity in the constrained debt markets.

Last month, Kostya Zolotusky, BCC's managing director of capital-markets development, admitted at an investor's day in London that the manufacturer was working on an Ex-Im Bank-backed capital markets structure that should come to market "within the next six months."

Ex-Im Bank estimates it will provide between $7 billion and $9 billion in guaranteed deals this year, and Zolotusky said, "It would not surprise me if a couple of billion is for these structures."

Airline Transport Intelligence

By Mary Kirby

Leasing firm Aviation Capital Group (ACG) has acquired new Airbus A330s under a sale/leaseback agreement brokered with Colombia’s Avianca.

The sale/leaseback deal covers the initial two of 10 Rolls-Royce Trent 700-powered A330-200s ordered by the carrier.

The aircraft are the first new A330s purchased by ACG.

Avianca has already taken delivery of the first A330, a 280-seat aircraft registered as N948AC. The second is expected to be delivered in November, says a source.

He says Avianca has agreed to lease the aircraft for six years, but that the contract contains renewal rights.

The carrier already leases a Boeing 767-200ER from ACG.

“We are proud to be part of Avianca’s strategic planning for the future and we except to further extend our association with Colombia’s leader airline and one of the first of the region,” says ACG general director R Stephen Hannahs in a statement.

Avianca, meanwhile, continues to hold orders for eight more A330s with the airframer. The carrier says its first A330 will be assigned to cover the routes from Colombia to Miami, Lima, Sao Paulo and Madrid.

Avianca president Fabio Villegas Ramirez says the carrier’s growing new Airbus fleet keeps Avianca “avant garde in the technological advance of this region".

Commercial Aviation Online

By Laura Mueller, Commercial Aviation Online, August 26, 2008

Aviation Capital Group (ACG) maintains a positive outlook for the leasing industry despite a challenging operating environment.

Speaking on a conference call with Wachovia yesterday, ACG CEO Stephen Hannahs and VP-Finance Madhu Vijayaraghavan said the optimistic outlook is due to: demand for fuel-efficient aircraft, the absence of a narrowbody replacement and the continuing trend away from airline ownership of aircraft.

ACG has 157 aircraft on order from Airbus and Boeing. All aircraft deliveries through 2010 have been placed and the lessor is evaluating offers for three Airbus A320s, which have just been obtained. Remaining aircraft deliveries include: 68 Airbus A320 family aircraft, five Boeing 787 Dreamliners and 84 Boeing 737NGs.

The lessor says it is negotiating additional sale and leasebacks on new deliveries from customer orders. Its order book is spaced over a seven-year period, providing for “prudent growth and orderly fleet renewal.“

In regards to aircraft availability, the lessor notes a few near-term Airbus slots have opened up, but it has “not seen any similar availability out of Boeing.“

ACG also confirmed pricing for ExIm Bank/ECA financings has widened by 20-30 basis points. This is consistent with remarks in CAO’s 14 August article on pricing, in which a banker notes a year ago Exim/ECA pricing was sub-Libor, but is now around Libor plus 40 basis points.

Jane’s Transport Finance

Despite the current market conditions, aircraft lessors are experiencing high demand for services. But are the good times just a short-term uptick or a longer-term phenomenon? Alison Tucker reports.

Business is booming for lessors as market conditions that are putting the squeeze on other sectors of the industry - high fuel costs, the credit crisis and the slowdown in the world economy - serve to push business their way.

High demand for leased assets at this stage of a cycle is unprecedented. Whether such a development represents a short-term phenomenon or a long-term trend is yet to be seen; but with only about 4,500 commercial aircraft on lease out of roughly 18,000 in operation, growing demand for new-technology aircraft coupled with strong order books means that lessors are in a good position to weather the current downturn in global aviation.

Since the scenario began to unfold late last year, airlines worldwide have been faced with the prospects of cancelling or delaying deliveries of new aircraft or sub-leasing aircraft to other carriers as cash flows come under pressure. Leasing aircraft has become an expedient solution to current airline woes, allowing carriers to expand aircraft fleets without putting more debt on balance sheets. It also enables airlines that cannot buy new aircraft because of prohibitive capital costs - or because they are far down the new order waiting list - to access modern, fuel-efficient aircraft in a more suitable timeframe.

A quick look at the order books of both Airbus and Boeing indicates that aircraft lessors are bullish on the operating lease market. Lessors control more than 15 per cent of the Airbus and Boeing order backlog, including many of the near-term delivery positions. As well as playing a dominant role in acquiring new aircraft directly from manufacturers, lessors are expanding their portfolios through sale/leaseback transactions and purchases of second-hand aircraft from carriers and other leasing companies in a bid to capitalise on growing demand.

According to Klaus Heinemann, chief executive officer (CEO) of Netherlands-based lessor Aercap Holdings, the long-term outlook for lessors is positive. “The proportion of the global fleet under operating lease has increased from 17 per cent in 1990 to 35 per cent currently. The industry believes that operating leases will continue to become more popular and that 40 per cent or more of the global fleet will be subject to operating leases over the course of the next 10 years,” he says.

Dublin-based lessor AWAS is similarly bullish about the prospects for aircraft lessors. “The number of leased aircraft in the global fleet grew by 17 per cent between 1992 and 2007. We expect similar growth to continue in the future, especially with airline credits weakening and financing liquidity tightening,” says Frank Pray, AWAS president and CEO. “The percentage of current Airbus and Boeing order backlog by lessors is still less than it has traditionally been and it is now more diversified with the two mega players International Lease Finance Corporation (ILFC) and GE Commercial Aviation Services (GECAS) being replaced by a strong group of sophisticated players. We consider this diversification good for Airbus and Boeing as well as for airlines.“

Economic growth in countries such as India, China and Russia, where a rise in disposable incomes is encouraging a greater amount of air travel, is also helping to increase demand for leased assets.

Cornerstone of demand

According to Steve Hannahs, CEO and group managing director of California-based less or Aviation Capital Group (ACG), this development in particular differentiates the present cycle from preceding ones and is a cornerstone of the strong demand that lessors are experiencing in the face of the industry downturn.

“This cycle is different,” says Hannahs. “There is globalisation in the airline business. Some airlines that didn’t exist in the 1980s are now acquiring aircraft. Among other countries, these airlines are domiciled in the Middle East, Russia, India and China. There has been a lot of catching up, meaning that countries other than the US and European countries have developed aviation infrastructure. There are also a lot more aircraft flying in European airspace.“

Hannahs notes that lessors have experienced a robust market over the past several years but predicts a slowdown of about 18 months in aircraft acquisitions, although this may affect airlines more so than lessors.

Crummy credits

“A major difference in this cycle is that airlines, for the most part, are crummy credits. Lessors provide more certainty for aircraft financiers. With experience in remarketing aircraft and a wide customer base, lessors are in a better position to place aircraft in the event of a default. New technology aircraft will also entail the requirement for managing aircraft assets in terms of maintenance. Banks that own aircraft suffer from asset management shortfalls, which will also push business in the direction of lessors,” he says.

“There is a lot of demand for aircraft and financiers are knocking on our doors. ACG has the backing of a strong corporate parent (financial services company Pacific Life). This is a relationship-driven industry and you want to be able to access capital in the down-times,” continues Hannahs.

By contrast, John McMahon, CEO of Genesis Lease, does not believe the current cycle is necessarily different from those before. “I’m not sure this aviation cycle is different - except that it is happening a couple of years earlier than expected,” he says.

“In previous cycles, there has been a run-up in aircraft orders leading to a peak in good economic times and subsequent deliveries take place in an economic downturn often accompanied by an external shock, such as the oil crisis of 1973; the US recession/savings and loan crisis in 1981/82; the first Gulf war in 1991; the terrorist attacks of 9/11; and, more recently, the credit and oil price crisis. There will be difficulties and casualties ahead but commercial aviation will restructure to accommodate the operating environment and will continue to be a key part of global infrastructure,” he says.

Large order books

The confidence of lessors in a continuing buoyant market is evident in several big-ticket orders placed with manufacturers.

In early January, Dubai Aerospace (DAE) confirmed a USD10.9 billion order for 100 Boeing aircraft comprising narrowbody and widebody models, following up a November 2007 letter of intent (LOI).

DAE entered the aircraft leasing arena in November 2007 with the simultaneous announcement of the acquisition of eight A330-200 aircraft from Emirates under a sale/lease-back scheme and the acquisition from GECAS of 20 aircraft, comprising

B-737s and A320s. DAE also penned a memorandum of understanding (MOU) in November 2007 with Airbus for 100 aircraft, including narrowbody and widebody versions. There are rumours that DAE may place another order within 18 months for about 50 A330 and B-777 aircraft.

In January 2008, AWAS completed an order for 100 new aircraft from Airbus. T his deal, valued at USD6.9 billion at list prices, will see AWAS take ownership of 75 new A320-family aircraft and have options for an additional 25 aircraft. In March, AWAS finalised an agreement to purchase six A330-300s from Airbus for Singapore Airlines (SIA) in a deal valued at USD2.1 billion. Financing was committed by two syndicates led by DVB Bank and KfW Ipex-Bank and HSH Nordbank.

BOC Aviation is likewise thinking big. The lessor plans to triple the size of its fleet to 300 aircraft over the next five years, taking advantage of sale/leaseback opportunities that would allow it to acquire aircraft without being captive to the long lead times for new orders precipitated by bulging manufacturer order books.

“We have a strategy of forward-placing aircraft,” says Robert Martin, BOC Aviation’s managing director and CEO. “Today, all except 16 of our 73 aircraft on order have been placed. The next new aircraft available for lease is in March 2010 and thereafter in 2011. With airline orders doubling between 2007 and 2010, many airlines are looking to do sale/leaseback deals as carriers require capital to expand fleet size. Leasing allows airlines to refleet without purchasing aircraft outright, which frees up cash on balance sheets for working capital.

“Demand from airlines for leased aircraft definitely exists. In the previous year we saw more than 10 competitors for one sale/leaseback deal but now there is only a handful. This year we are looking to expand our fleet via sale/leaseback transactions and have achieved success, notably concluding three B-777-300ER sale/leaseback deals with Air Canada. We also closed a narrowbody sale/leaseback with a Brazilian carrier last month.“

Aercap’s Heinemann is somewhat circumspect about the large orders penned. “There is a certain risk of over-ordering on the side of leasing companies and airlines,” he says. “If this problem arises, it is a risk that will need to be taken into account from as late as 2012 onwards since new aircraft delivery slots for the next four years have already gone,” he says.

New entrants

An inevitable development of growing demand for leased aircraft is increased competition within the sector as new entrants pitch themselves against established lessors in an effort to capitalise on burgeoning demand in high-growth regions.

A report by the International Air Transport Association (IATA) indicates that by 2011 the market share of air traffic should shift decisively towards Asia from the US and Europe, with regional travel within Asia representing about 27 per cent of all passenger traffic. “Strong growth in developing economies, particularly China and India, will continue to boost the global economy while high energy prices continue to support strong growth in the former Soviet Union and the Middle East,” the report notes. China in particular is witnessing a slew of leasing startups.

In 2007, Industrial and Commercial Bank of China (ICBC) established a leasing company that invests in big-ticket assets, including aircraft and ships. The leasing company was solely funded by ICBC with registered capital on CNY2 billion (USD292 million). China Merchants Bank was also green-lighted by the country’s regulator in 2007 to establish a big-ticket leasing business, also with CNY2 billion in registered capital.

China Development Bank recently entered the aircraft leasing market through the acquisition of a 95 per cent stake in Shenzhen Financial Leasing Co. Other shareholders include HNA (Hainan Airlines) Group and Xi’an Aircraft Industry (Group) Co Ltd. Registered capital of the new company is CNY7.48 billion. Other banks in China also plan forays into the aircraft finance sector.

Beijing-based aircraft lessor Dragon Aviation Leasing was formed in October 2006. It is a venture of China Aviation Supplies Import & Export Group Corporation (CASGC), which holds 50 per cent of Dragon Aviation Leasing and is contributing a key position in the Chinese aviation market; Aercap Holdings, which holds a 25 per cent share in the company and will manage the aircraft; and French bank Calyon, one of the key institutions in the aviation financing market, and which also has a 25 per cent stake in Dragon Aviation Leasing.

Dragon Aviation Leasing will initially focus on narrowbody aircraft with a geographical focus on the People’s Republic of China market where, according to estimates by airframe manufacturers, the Chinese domestic aviation market will require up to 2,600 additional aircraft during the next 20 years. The new venture expects to build a portfolio of USD1 billion worth of aircraft in the next several years.

The Middle East, with its vast reserves of oil money, has the potential to become a major centre for aircraft leasing. While the few leasing companies domiciled in the region benefit from generous and supportive governments and very deep sources of equity, there is some doubt as to whether there is sufficient impetus from bankers in the region to get into aircraft finance, bearing in mind the Middle East’s preference for real estate and the bond markets. Nonetheless, there has been some movement in this direction - particularly as the region hosts a large number of equity investors.

Aircraft lessor Falak Investments was set up in 2007 as a joint venture between Bahrain-based United International Bank and Muzun Partner Ltd, a company related to Switzerland-based lessor Novus Aviation. Novus Aviation is a familiar name in the aircraft finance market. Almost 10 years ago, Novus Aviation established the Muzun International Aviation Fund (MIAF), which has subsequently been completely sold out.

Falak Investments was established with 11 aircraft, valued at about USD400 million. The company plans to expand aircraft leasing activities and recently signed a letter of intent (LOI) with Royal Bank of Scotland (RBS) to acquire five additional aircraft, including A320-family, B-737NG, B-747-400 and ERJ-145 aircraft. Novus Aviation is the asset and aircraft lease manager of Falak Investments.

Further afield, Australian banking group Investec entered the aircraft leasing business this year with the launch of Investec Global Aircraft Fund and AUD73 million (USD68 million) in initial capital. Seed investors include three large industry superannuation funds - Auscoals Superannuation Seafarers Retirement Fund (SRF) and the Stevedoring Employees Retirement Fund (SERF).

Existing lessors are not treating the new entrants lightly. “We believe the se startups are to be taken seriously as they have determined financial backing and the aim to build global franchises over time,” says Heinemann.

While some banks and lessors have formed joint enterprises in regions where strongest demand is expected, Pray does not believe that being domiciled outside the developing regions of Asia and the Middle East will have much bearing on business growth. “Larger lessors work on a global basis anyway. At the current time, 31 per cent of AWAS business is in the Middle East and Asia, with our Asia exposure growing significantly over the next 24 months. Airlines in this region will seek out the best possible solutions. Where the lessor is based, we think, is irrelevant,” says Pray.

While agreeing with Pray that the global reach of a lessor is more important than where the company is based, both Martin and McMahon see a degree of benefit to having a local presence in different regional markets. “While lessors generally have a global rather than regional focus, being in the heart of activity does provide some advantage,” says BOC Aviation’s Martin.

For McMahon, “aircraft leasing is a truly global business and a properly diversified portfolio needs to reflect this. Each lessor can contend that he has some advantages in his home market and to a certain extent this may be true, but those benefits can become disadvantages if there is too much exposure to a single market. On the other hand, a global lessor can certainly benefit from local presence in various markets. In this respect, Genesis is fortunate that the company’s relationship with GECAS provides market access through 27 offices worldwide,” he says.

Opportunities Stateside

Although Asia and the Middle East will provide the largest potential for lessors, the US, which accounts for 36 per cent of the world’s commercial aircraft, is also expected to boost demand for leased assets as legacy carriers park old-technology aircraft in favour of leasing more fuel-efficient models.

According to McMahon, the US, in the short-to-medium term, is likely to represent more of a replacement market than a growth market. “This market is still huge in scope because there are so many aircraft that need to be replaced. I would expect US airlines to have a new focus on the benefits of operating leasing as they re-fleet. The US represents around 12 per cent of the Genesis portfolio and there is scope for that figure to grow,” he says.

Aercap sees potential in the US market “in the medium term, though certainly not in the short-term". True to strategy, BOC Aviation’s Martin sees the potential for a number of sale/leaseback deals in the region. “US carriers have had excess capacity for a long time and have been trimming their fleets to adjust to market demand. We can work with them to place out the excess capacity via sub-leases or sales,” says Martin.

AWAS, says Pray, sees limited opportunity in the US. “Currently we have nearly 20 per cent of our20fleet placed in North America. Due to the ageing US fleet, we do expect that US carriers will need to seek out newer aircraft in the near future and with our forward order pipeline of new aircraft, we are well placed to meet this demand. However, at this point in time, we achieve better risk-adjusted returns in other parts of the world so our exposure to the US is likely not going to increase,” says Pray.

New models

Lessors have benefited from production delays with regard to the B-787 and, to a lesser extent, the A350 aircraft. Delays in manufacturing the B-787 have resulted in increased demand for B-767-300ER leases, boosting that aircraft’s lease rentals and values.

The B-787 is now expected to be available in late 2009 and the A350 in 2013. Although these aircraft are designed to replace B-767 and A330 aircraft, lessors perceive little threat to business when the new Boeing and Airbus models do enter the market.

“We don’t expect the arrival of the B-787s and A350s to impact our business since these big aircraft will be in a completely different category in terms of monthly lease rentals compared with the B-767,” says Heinemann.

Pray makes a similar point. “There is a significant capital cost differential between current production and new production technology aircraft that will keep current production aircraft such as the A330 and B-767-300ER very much in play. The main focus is on operating economics: the B-767-300ER still has lower total trip cost than either the A350 or the B-787 and the current production A330-300 has lower seat mile cost than both the A350 and B-787 models. In essence, we see demand in this sector continuing even when new technology aircraft come to market,” says Pray.

According to BOC Aviation’s Martin, demand for the B-777-200ER has also benefited from delays to the B-787. Focusing on narrowbody A320 and B-737NG aircraft and, to a lesser extent, the B-777-300ER, Martin foresees little impact on BOC Aviation’s business when the B-787 and A350 come online.

Lessors are also watching the new breed of regional jets from Russia, China and Bombardier’s C-Series with interest, but the aircraft will need to prove their mettle and marketability before lessors will invest in them. Heinemann voices the majority view, saying: “We will only consider the possibility of ordering any of these new aircraft once they have been launched and established a sufficient market base.“

© 2008 Jane’s Information Group

Finanzas

Bogotá, 2 oct (EFE).- La aerolínea colombiana Avianca incorporó hoy a su flotilla de aeronaves el primero de 10 Airbus A330-200 con capacidad para 280 pasajeros, dentro del plan de la empresa para adquirir 60 aviones al consorcio fabricante europeo.

La aeronave fue adquirida en la modalidad de arrendamiento financiero o leasing y presentada en los hangares de Avianca en el aeropuerto Eldorado, de Bogotá, por directivos de la compañía aérea, de las casas fabricantes y de la entidad financiera, Aviation Capital Group.

El aparato servirá las rutas desde Colombia a Lima, Sao Paulo, Miami y Madrid, entre otras, y tiene 18 asientos de clase ejecutiva y el resto turista.

El avión utiliza motores Rolls-Royce y tiene equipos aeroespaciales de última generación y sistemas de entretenimiento a bordo, así como un alcance de 12.500 kilómetros o 6.750 millas náuticas.

Este primer Airbus A330-200 recibido por Avianca desde los talleres de Toulouse (Francia) es el quinto de esta marca que llega a la aerolínea colombiana en su plan de renovación de equipos hasta 2015, que incluye 12 aviones Boeing B787 Dream Liner estadounidenses.

La transacción con Airbus comprende 18 aeronaves A319, 32 equipos A320 y 10 aviones A330, de los cuales han llegado a Colombia cinco.

De ellos, este año se recibirán otros ocho aviones.

El vicepresidente de Airbus para América Latina, Rafael Alonso, declaró que "con la incorporación de este primer A330-200 Avianca pondrá al servicio de sus clientes beneficios exclusivos en materia de confiabilidad, confort e innovación" y se estimularán las rutas de largo alcance.

Peter Turner, vicepresidente de Ventas y Atención al Cliente para Latinoamérica de Rolls-Royce, explicó que "con este acuerdo Avianca se convierte en la primera compañía aérea de Latinoamérica en contar con motores Trent 700 en sus aeronaves".

"La incorporación del primer Airbus A330 a la flota Avianca constituye un momento especial para todos aquellos que hacemos parte de la aerolínea", expresó el presidente de la firma, Fabio Villegas.

Añadió que con los nuevos equipos, Avianca "se mantiene a la vanguardia en tecnología en la región".

También presenció la entrega de la aeronave Stephen Hannahs, director general de Aviation Capital Group, que financia el plan de modernización de la flotilla de Avianca.

Avianca, primera aerolínea fundada en América, en 1919, forma parte desde 2005 del grupo brasileño Sinergy, de Brasil, junto con las aerolíneas OceanAir, de Brasil, y Vip S.A., de Ecuador.

La aerolínea colombiana tiene una flotilla de más de 52 aviones y cuenta con unos 6.000 empleados.

Caribbean & American News

Caribbean and Americas News, October 5, 2008

Colombia. El primer Airbus A330-200 recibido por la aerolínea Avianca, con capacidad para 280 viajeros -18 en Clase Ejecutiva y 262 en Clase Turista- es un equipo de última generación, que incorpora lo último en materia aeroespacial y de entretenimiento a bordo. Su configuración y rendimiento lo hacen ideal para rutas de gran alcance, informa la compañía en un comunicado.

Esta aeronave es la quinta en llegar a esa empresa, y hace parte de un paquete de 60 nuevos equipos Airbus y una docena de Boeing B787 Dream Liner adquiridos por Avianca, en el marco de su proceso de modernización y renovación de flota, que se extenderá hasta el año 2015.

La transacción con el consorcio europeo comprende 18 aeronaves A319, 32 equipos A320, 10 aviones A330. De este total de aeronaves, Avianca recibirá a lo largo del año en curso, ocho equipos así: cuatro aviones Airbus A319-100, dos aviones A320-200 y dos A330-200. A la fecha, la Aerolínea ya ha recibido tres A319-100 un A320-200 y un A330-200.

El A330-200 en incorporación fue tomado bajo la modalidad de leasing a la firma Aviation Capital Group (ACG), líder mundial en servicios financieros y de arrendamiento de aeronaves.

El Presidente de Avianca, Fabio Villegas Ramírez, calificó así este hecho: "La incorporación del primer Airbus A330 a la flota Avianca constituye un momento especial para todos aquellos que hacemos parte de la Aerolínea. Su avanzada tecnología en materia de aviónica, junto con su novedosa configuración interior y su revolucionario sistema para el entretenimiento a bordo, constituyen un conjunto de ventajas únicas que nos permiten dar cumplimiento a varios de nuestros objetivos como empresa de servicios. Con éste y los nuevos equipos de vuelo Airbus que ya hacen parte de la flota Avianca, estamos elevando nuestro estándar de atención, al tiempo que mejoramos la eficiencia operacional y mantenemos a Avianca a la vanguardia en tecnología en la región".

Por su parte, Rafael Alonso, Vicepresidente Senior de Airbus para América Latina, expresó: “Con la incorporación de este primer A330 - 200, Avianca pondrá al servicio de sus clientes beneficios exclusivos en materia de confiabilidad, confort e innovación, que harán más placentero viajar. Además, como línea operadora, Avianca podrá aprovechar al máximo la versatilidad de éste y sus próximos A330, los cuales podrán ser usados en una amplia gama de rutas de largo alcance, aprovechando una de las características más importantes del A330-200. Nos sentimos orgullosos de tener a Avianca entre nuestros clientes y hacer parte del desarrollo del sector aéreo colombiano".

A su vez, Peter Turner, Vicepresidente de Ventas y Atención al Cliente para Latinoamérica de Rolls- Royce afirmó: "Este es un día muy importante para Avianca y Rolls-Royce. Las dos compañías estamos orgullosas de fortalecer nuestra relación con la primera de 10 entregas previstas de motores Trent 700 instalados en las aeronaves Airbus A330-200. Gracias a este acuerdo, Avianca se convierte en la primera compañía aérea de Latinoamérica en contar con motores Trent 700 en sus aeronaves". “El alto desempeño de estos propulsores proporcionará la garantía de confiabilidad y eficiencia que una aerolínea como Avianca requiere para su exigente operación. Con Avianca como socio estratégico, esperamos alcanzar excelentes niveles de productividad. Al tomar parte en el proceso de modernización de Avianca, Rolls Royce espera contribuir decididamente con el desarrollo de la industria aérea en Colombia, América y el mundo", anotó el directivo.

Finalmente, R. Stephen Hannahs, Director Administrativo del Grupo de Financiación y Director General de Aviation Capital Group, declaró: “Nos enorgullece formar parte de la planificación estratégica de Avianca para el futuro y esperamos con beneplácito la oportunidad de ampliar nuestra asociación con la Aerolínea líder de Colombia y una de las primeras de la región".

A la vanguardia. El A330-200 tiene un alcance de hasta 12.500 kilómetros/6.750 millas náuticas, permitiéndole conectar directo y sin escalas desde Colombia a destinos en América y Europa.

En su fabricación se destacan los materiales, que incluyen aleaciones de metal más ligeras y fuertes, lo que convierten a esta aeronave en un aparato mucho más liviano. En línea con esto, y con el fin de mejorar su velocidad, el ala del avión ha sido optimizada aerodinámicamente, logrando así una mayor eficiencia operacional y un menor consumo de combustible.

Cabina de pilotos. Los Airbus A330-200 cuentan con una cabina de pilotos más flexible y cómoda para los comandantes del avión. Con la más avanzada tecnología aeronáutica, estos aviones disponen de sofisticados sistemas de navegación para hacer más amigable el control y monitoreo del vuelo.

Cabina de pasajeros. La amplitud de la cabina de pasajeros de los Airbus A330-200 de Avianca permitirá a la Aerolínea ofrecer una comodidad sin igual a sus viajeros. Gracias a un fuselaje más amplio, a bordo de éste y de los diez aviones de este tipo configurados para Avianca, los pasajeros podrán disfrutar de un mayor espacio entre silla y silla, compartimentos para equipaje de mano más espaciosos en las dos cabinas de pasajeros, así como de innovadores sistemas de información y entretenimiento en cada asiento del avión, tanto en clase ejecutiva como en clase turista.

Mayor capacidad de carga. Los A330-200 de Avianca tienen capacidad para llevar 36.000 kilos de carga al despegue. Así, al contar con bodegas de carga más amplias, Avianca podrá complementar el transporte de pasajeros con el traslado de bienes y mercancías.

Motores. El A330 está dotado con motores son Rolls Royce Trent 772B, con un empuje máximo de 71.100 libras. Dichos propulsores incorporan tecnología de punta que ofrece un óptimo desempeño, menor consumo de combustible y una sustancial disminución en emisiones de CO2, cumpliendo con los nuevos estándares establecidos por la Comisión para la Protección Ambiental de la Aviación, de la Organización Internacional de Aviación Civil (ICAO), que entró en vigencia a comienzos de 2008.

Commercial Aviation Online

By Laura Mueller, Commercial Aviation Online

With difficult capital markets and bank balance sheets under strain, the need for lessors to be able to access diverse sources of funding is growing increasingly important as further signs of stress appear in the aviation operating environment.

“We have eight or nine different funding avenues and a strong parent company so we are able to access the capital markets anytime we want,” says R Stephen Hannahs, MD and CEO of Aviation Capital Group in an interview with CAO. “We have extensive capital resources for our expansion.“

ACG’s parent company, Pacific LifeCorp, has no subprime exposure, which puts the lessor in a strong position to access financing.

But Hannahs warns that “raising new equity capital is going to be very challenging” for some lessors.

“The securitisation market is virtually closed...and the highly structured deals are almost impossible to do right now.“

Hannahs stresses that any capital flowing into the market should have a lasting commitment- a view he says is shared by the manufacturers.

“We need long-term, patient capital for this industry. Not capital that will come in and get out quickly,” says Hannahs.

“I think Airbus and Boeing are being very careful who they sell aircraft to. They are in the business of selling airplanes, but they are also in the business of being paid.“

Both manufactures remarked during the Farnborough air show that “stable lessors such as ACG” are increasingly important in today’s deteriorating credit markets.

Unlike the short but deep downturn that characterized 9/11, Hannahs anticipates this “downturn will be shallower, but longer.“

Also, unlike 9/11, this time around, there is financial pressure in the bank market and the capital markets, which is causing concern about the future sources of liquidity in the wake of increased aircraft deliveries.

“Every decade, we have this same question about where the money is going to come from, and every decade something comes up,” Hannahs says.

“Today, I don’t know where the money will come from [for airlines and some lessors]. No one could figure it out in the early 1990s, but then we got EETCs, and later we got securitizations. I suspect folks who get paid to think of these things will come up with something this time around, too.“

Hannahs believes there is a “prospect of consolidation” among lessors during this downturn.

“The question will be at what price and how easy will the deal be to execute. In 2005, ACG purchased Boullioun so we understand these issues.“

However, potential acquisitions don’t seem to be on ACG’s cards at this point.

“We examine every opportunity, but most sellers want a premium because they are selling a platform. But we don’t need a platform, so we wouldn’t be willing to pay a premium.“

Commercial Aviation Online

By Laura Mueller, Commercial Aviation Online

Aviation Capital Group’s recent Airbus A320-family aircraft order includes three fourth-quarter 2009 deliveries that will help bulk up the lessor’s near-term order positions.

“Our first Airbus orders were due to be in 2013, but at the last minute, Airbus said it had five positions open up and they offered three to us,” says Stephen Hannahs, CEO of Aviation Capital Group in an interview with CAO at Farnborough.

“We are a little light on orders during the next few years, so would like to fill in those years with selective sale and leasebacks, or pop-up orders like what happened with Airbus.“

“We are looking to fill out our skyline through a combination of growth and renewal.“

As an example, this year ACG will add two Trent-powered Airbus A330-200ER aircraft on sale and leaseback with Avianca. The aircraft will deliver in September and November.

“We aim to have about 25 aircraft a year and are looking to take more aircraft in 2009, and add positions in 2015 and 2016.“

ACG’s order for 23 additional Airbus A320-family aircraft will give the lessor a total of 148 Airbus narrowbody in its portfolio.

This week ACG also placed an order for a further 15 Boeing 737-700s. The first 737-700 is due for delivery in 2013, eight will follow in 2014 and six in 2015.

The order follows a previous order for 17 Boeing 737s placed in April. To date, ACG has ordered 96 Boeing aircraft - all of which, apart from five 787s, are 737s.

Hannahs doesn’t anticipate a narrowbody replacement in the near future.

“We have meetings with Boeing and Airbus on a constant basis and I still think the economics aren’t completely there. The engines guys are asserting that they have an engine that will be available in 2016, but we will see if that occurs.“

“Also I think the R&D dollars aren’t there due to the capital requirements of launching the 787, the A350 and now with the finishing of the A380.“

Instead, Hannahs anticipates Airbus will come to market with an enhanced A320 that will see “the addition of winglets and maybe some clean-up on the aerodynamics.“

“I suspect what you will see from Airbus is a warmed over A320 in 2012 or 2013. We will see an interim aircraft that will offer some of the operating costs savings, but without the drama of a new aircraft and the dollars that go with it.“

Hannahs is also looking to build up the widebody positions, saying he would like to “add more 787s", but is also “studying the Airbus A350.“

“I believe the A350 will be a good aircraft so we are studying the A350-900.“

“I have cautioned Boeing that the A350 will go right into the teeth of the 777-200ER, so Boeing will need to look at what kind of competitor’s response it will give to the A350.“

But Hannahs dismisses any jumbo aircraft orders.

“We don’t seeing ourselves ordering the 747-8 or A380s; they are not good leasing assets for us.“

Washington CEO

By: Bryan Corliss

Boeing landed two more jet orders today, while Cougar-in-Chief Scott Carson played nice with his Airbus counterparts and Boeing’s St. Louis-based defense unit smacked Team Toulouse upside the head with an oil barrel.

First, the sales news. Boeing booked orders for a total of 50 planes, all 737s.

The biggest order came from Malaysian Airlines, which is taking 35 737-800s in deal with a list-price value of $2.6 billion. With discounts, Malaysian’s probably paying closer to $2 billion even.

Malaysian’s executive director said the airline plans to use the planes to replace old, less-efficient 737-400s and to expand its route network. And here’s where it gets interesting.

Dow Jones reports that Malaysian’s Tengku Azmil Zahruddin went on to say the aircraft would allow his airline to “expand to points which were not previously economically viable” within its core region. All airlines are facing a “perfect storm” of rising fuel costs, an uncertain global economy and sharp competition, he said, and Malaysian Airlines will attempt to weather the storm by developing new routes and increasing frequency on existing routes.

The other buyer was California-based jet-leasing company Aviation Capital Group, which signed up for 15 737-700s. The list price was given at $934 million, but the actual sale price after discounts was probably a little more than $650 million. AGC also said it’s in talks with Boeing for between 10 and 15 Dreamliners.

Once again, the buyers said they’re buying planes because airlines need more-efficient jets in the face of rising fuel costs. AGC CEO Stephen Hannahs told Dow Jones that U.S. airlines specifically are in “desperate need” of new planes to replace older, less fuel-efficient aircraft. Leasing is a good option, he continued, for airlines that can’t get loans to buy new ones.