ISSUE SEVEN                                                                               MARCH/APRIL 2012        THE LEAD...
EDITOR’S LETTER                              STILL DANCING                                                           Chuck...
MIDDLE EAST      Lease in the          Middle East     Aircraft and engine leasing in the Middle East is fast     becoming...
MIDDLE EAST                                                                                 TABLE 1: TOP 30 OWNERS OF     ...
MIDDLE EAST TABLE 2: AACO AIRCRAFT FLEET AIRLINES: OWNED AND LEASED Airline                      Total          Owned     ...
MIDDLE EAST                           TABLE 3: PORTFOLIOS OF TOP 3 LESSORS IN MIDDLE EAST                                 ...
MIDDLE EAST TABLE 4: AACO AIRCRAFT TYPE – OWNED VS LEASED                     In 2011, there was some Aircraft type       ...
MIDDLE EAST TABLE 5: AACO ENGINE FLEET – OWNED AND LEASED                                          sector might be reducin...
MIDDLE EASTTABLE 7: COMMERCIAL ENGINE FLEET AACO AIRLINES – OWNED AND LEASEDAirline (Fleet)            Engine             ...
MIDDLE EAST33% are leased by the airlines versus 67%     The growth of regional aircraft             airlines clearly see ...
DATA COMMERCIAL AIRCRAFT CMVs AND LEASE RATES – 15TH March 2012                                                           ...
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Lease In The Middle East Aircaft & Engine Leasing

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Aircraft & Engine Leasing in the Middle East is becoming an attractive area for investment. The article tracks its development and highlights its potential.

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  • Truly stated!!After reading your article and news like these http://www.pr.com/press-release/633344 . The emerging economies will be driving these markets. The major players in the leasing market - Boeing Capital Corporation, AerCap, Gecap, are eyeing on these areas in the coming years.
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Lease In The Middle East Aircaft & Engine Leasing

  1. 1. ISSUE SEVEN MARCH/APRIL 2012 THE LEADING GLOBAL PUBLICATION FOR OPERATORS OF AND INVESTORS IN AIRCRAFT AND ENGINES Investing in engines Crackdown on OEM control? The demographic problem w w w. a v i a t i o n n e w s - o n l i n e . c o m
  2. 2. EDITOR’S LETTER STILL DANCING Chuck Prince, chief of Citigroup, famously said that if the music is still playing, you have to keep dancing. Although he was referring to banks before the 2008 crash, the same could be attributed to original equipment manufacturers today. The US Federal Aviation Administration (FAA) is poised to clamp down on engine OEMs seeking to control the aftermarket – see the FAA circular dated March 23 regarding its policy statement on inappropriate restriction of the use and availability on OEM data. Before the FAA and potentially the European Commission take more forceful action, indus- try sources say OEMs are seeking to control even more of the aftermarket with their new crop of engines, by securing operators into fleet-hour agreements (FHAs). This is a savvy move by the OEMs, and one no doubt applauded by their shareholders, but it effectively cuts engine lessors out of the market for new engines as they would be ISSUE TWO, VOLUME TWO March/April 2012 unable to demand maintenance reserves for those engines under FHAs. This situation is not a new concern – this magazine published an article on this issue last year – but EDITORIAL TEAM the action is ramping up as OEM strategies become clearer and lessors are increasingly Victoria Tozer-Pennington victoria@aviationnews-online.com pushed out of the market. See pages 16-29 for more on this important issue, which has the potential to transform the leasing sector and aftermarket. Philip Tozer-Pennington Soaring fuel bills are crippling airlines around the world, while fuel hedges are not philipt@aviationnews-online.com performing as hoped due to the recent volatility of oil prices. Still, most airlines agree Kaleyesus Bekele partial hedging of fuel cost is an essential strategy in managing operating expenses. kaleyesus@aviationnews-online.com See the results from an expansive survey of airlines about their hedging strategies and SUBSCRIPTIONS motivations conducted by Mercatus Energy Advisors on pages 32-35. Annual subscription: Ethiopian Airlines is one such airline feeling the pain of the high cost of oil, and it has £29 (UK/EMEA/US/Canada) £42 (Rest of the world) been working with its employees to make cost savings to ensure the airline is kept on a firm footing with regard to its expansion plans. African editor Kaleyesus Bekele talks to Subscription enquiries to: Tewolde Gebremariam, chief executive of Ethiopian Airlines on pages 56-59. subscriptions@aviationnews-online.com Looking east, this issue of Airline Economics also highlights developments in China ADVERTISING SALES and its bid to develop its own aircraft manufacturing industry (pages 44-47). We also John Pennington speak to Norman Liu, CEO of GECAS, about why the aircraft lessor remains the world’s john@aviationnews-online.com number one lessor, according to the 2012 Aviation 100 poll results. Philip Tozer We hope you enjoy these and the many other features and news analysis pieces in philipt@aviationnews-online.com this month’s issue. As always, if you have any ideas about future articles or comments PRODUCTION AND ONLINE on any of the issues raised, please do not hesitate to get in touch. Dino D’Amore dino@aviationnews-online.com Kathy Alys and Jo Gunston, subeditors Cover work by Martin Pope DIGITAL ISSUE Digital version production by Symbian Print Intelligence PUBLISHER Victoria Tozer-Pennington Aviation News Ltd Managing director Suite 16745, Lower Ground Floor, 145-157 St John Street, London, EC1V 4PW Registered in England & Wales Company number: 7351543 Copyright 2011 Aviation News Ltd Airline economics (Print) ISSN 2045-7154 Airline economics (Online) ISSN 2045-7162 Printed in England through Ben Chater Printing All rights reserved. No part of this publication may be reproduced by any means whatsoever without express permission of the Publisher. Although great care has been taken in the compilation of Airline Economics, Aviation News Ltd does not take any responsibility for the views expressed herein.www.airlineeconomics.co Airline Economics March/April 2012 1
  3. 3. MIDDLE EAST Lease in the Middle East Aircraft and engine leasing in the Middle East is fast becoming an attractive area for investment. Monis Hasan tracks its development and highlights its potentialW ith many produc- aircraft, lessors can offer airlines an advantage in the form of equity support tion slots for new attractive mix of lease maturities and through their respective governments. aircraft from Air- structured payment programmes with As Emirates, Qatar Airways and Etihad bus and Boeing predictable operational cost require- show, government equity investment can sold out to 2015 and ments. Fuel prices are high, and capital still have an impact on today’s marketsome even until 2020, leasing aircraft is markets will continue to be difficult this structure. For these airlines, governmentbecoming essential for airlines seeking year and next, so lessors are becoming a investment has provided a huge influenceto expand their fleets. Carriers in the leading choice for sale/leaseback deals or in their development and will continue toMiddle East are rapidly expanding, and as direct suppliers for airlines that do not do so. When the government is the solethe substantial growth in air traffic in the have financing or do not have a near-term shareholder, it provides access to aircraftregion offers lucrative opportunities for order book to replace older aircraft. finance at favourable terms. Addition-aircraft and engine lessors to expand cli- Access to capital in today’s market ally, these airlines also have had access toent relationships, while also spreading constitutes a material barrier to entry export credit facilities from both the UStheir portfolio risk. into the industry or expansion. Yet air- Export-Import Bank and the European Given the demand for different lines in the Middle East have a unique export credit agencies.60 Airline Economics March/April 2012 www.airlineeconomics.com
  4. 4. MIDDLE EAST TABLE 1: TOP 30 OWNERS OF AACO-REGISTERED AIRCRAFT Owner Aircraft count Saudi Arabian Airlines 110 EgyptAir 59 Air Algerie 52 GECAS 52 Qatar Airways 47 ILFC 43 Royal Air Maroc 37 Emirates 36 Tunisair 32 Syrian Arab Airlines 26 Libyan Airlines 19 Kuwait Airways 17 Middle East Airlines 16 ALAFCO 15 Etihad Airways 14 The CIT Group Inc 14 EgyptAir Express 12 Gulf Air 12 Oman Air 12 Yemenia 12 Afriqiyah Airways 11 DAE Capital 11 Government of Kuwait 10 RAM Leasing Ltd 9 Waha Leasing 9 Air Arabia 8 BOC Aviation 8 Credit Agricole CIB 8 Pembroke Group Ltd 8 Hong Kong Aviation Capital 7Aircraft and engine financing Aircraft and engine financing in the East include not just airlines but major Middle East has matured and become lessors, as shown in Table 1. The largestin the Middle East has matured much more sophisticated. Aircraft and lessors in the region include Gecas, ILFC,and become much more engine leasing has grown substantially Alafco, CIT Group, DAE Capital, RAM in the region, and has fostered the cre- Leasing and Waha Capital.sophisticated. Leasing has ation of many regionally based aircraft Table 2 shows the commercial aircraftgrown substantially in the and engine lessors. In the Middle East, fleet of AACO airlines with a breakdown Kuwaiti lessor Alafco is emerging as a between owned and operating lease air-region, and has fostered the big player, with a fleet of 44 aircraft. DAE craft. There are 942 aircraft registered,creation of many regionally Capital has a 41-aircraft portfolio and with 34% on operating leases. This is inbased aircraft and engine Abu Dhabi-based Waha Leasing, previ- line with the global aircraft leasing per- ously called Oasis International Leasing, centage of between 35% and 40% andlessors has 24 aircraft in its portfolio. The top 30 shows that the Middle East carriers are owners of Arab Air Carriers Organization fairly advanced in their leasing practices. (AACO) registered aircraft in the Middle Emirates Airline, with a fleet of 162, haswww.airlineeconomics.com Airline Economics March/April 2012 61
  5. 5. MIDDLE EAST TABLE 2: AACO AIRCRAFT FLEET AIRLINES: OWNED AND LEASED Airline Total Owned Operating Lease % Leased Emirates Airline 162 55 107 66% Saudi Arabian Airlines 138 110 28 20% Qatar Airways 103 62 41 40% EgyptAir 65 59 6 9% Etihad Airways 59 39 20 34% Royal Air Maroc 58 44 14 24% Air Algerie 52 52 0% Gulf Air 35 14 21 60% Royal Jordanian 35 8 27 77% Tunisair 32 32 0% Kuwait Airways 27 17 10 37% Syrian Arab Airlines 27 26 1 4% Oman Air 26 15 11 42% Air Arabia 25 8 17 68% Libyan Airlines 20 19 1 5% Middle East Airlines 17 17 0% Yemenia 14 12 2 14% Afriqiyah Airways 12 11 1 8% EgyptAir Express 12 12 0% Iraqi Airways 10 0 10 100% Sudan Airways 9 7 2 22% Felix Airways 4 2 2 50% Total 942 621 321 34%leased 107 of its aircraft, while Saudi Ara- The more limited customerbian Airlines, which has a fleet of 138,leases only 28 aircraft. base of the widebody aircraft Alafco, DAE Capital and Waha Leas- makes these assets a littleing are the big three aircraft lessors basedin the Middle East. Table 3 shows their less liquid than narrowbodyaircraft portfolios. Of the three, Alafco is aircraft. Alafco, like any lessor,the biggest, with 44 aircraft in its portfolioand plans to double its fleet in the next five wants to move its high-valueyears. The company was initially estab- assets quickly and so is morelished by Kuwait Airways Corporation. It focused on narrowbody typeshas traditionally invested in narrowbodyaircraft such as the A320 and the 737, and liner aircraft. Over the next five years, thethis will continue to be its strategy going company plans to own 100 aircraft withforward. It also placed an order for 50 an average age of six to seven years. At theA320neo aircraft at the Dubai Air Show same time, it is also evaluating new aircraft2011. The more limited customer base of products from other manufacturers suchthe widebody aircraft makes these assets a as Bombardier and Embraer. The lessorlittle less liquid than narrowbody aircraft. has also expanded its fleet through a num-Alafco, like any lessor, wants to move its ber of sale-and-leaseback transactionshigh-value assets quickly and therefore is with various airlines.more focused on narrowbody types. How- DAE Capital is the second biggest les-ever, it made an exception in 2009 when sor in the region. It initially had plansthe company ordered 22 of 787 Dream- to be the biggest leasing company in the62 Airline Economics March/April 2012 www.airlineeconomics.com
  6. 6. MIDDLE EAST TABLE 3: PORTFOLIOS OF TOP 3 LESSORS IN MIDDLE EAST Operator Type Aircraft count Air Europa 737 2 Alafco A320 1 Anadolu Jet 737 4 Caribbean Airlines 737 1 China Eastern Airlines 737 1 China Eastern Airlines A320 1 China Southern Airlines 777 2 Ethiopian Airlines 737 4 ALAFCO Malaysia Airlines 777 1 Okay Airways 737 2 Olympic Air A320 4 Royal Jordanian A320 2 Saudi Arabian Airlines A320 13 Sky Airlines 737 2 Transaero Airlines 777 1 Turkish Airlines 737 1 Vietjet A320 2 TOTAL 44 Anadolu Jet 737 2 DAE Capital 737 1 easyJet A319 4 Emirates 777 3 Emirates A330 8 Garuda Indonesia 737 8 DAE CAPTIAL IndiGo A320 3 Kingfisher Airlines A330 3 Niki A320 1 Philippine Airlines A319 2 Spirit Airlines A319 1 Tway Airlines 737 1 Virgin Australia 737 2 Wizz Air A320 2 TOTAL 41 Aeroflot-Russian Airlines A330 1 Air Canada A321 1 Air Mekong CRJ 4 Emirates A340 2 Etihad Airways A330 6 WAHA LEASING Iran Air A320 1 Jazz Air CRJ 1 Malaysia Airlines 777 2 Qatar Airways A330 1 RAK Airways 737 1 Singapore Airlines A330 2 Sriwijaya Air 737 1 Wind Jet A320 1 TOTAL 24www.airlineeconomics.com Airline Economics March/April 2012 63
  7. 7. MIDDLE EAST TABLE 4: AACO AIRCRAFT TYPE – OWNED VS LEASED In 2011, there was some Aircraft type Operating Owned Total Lease % shrinkage in the Middle East lease BOEING market, which has affected 707 2 2 0% leasing. Aircraft lessors are 727 3 3 0% still placing aircraft in the 737 23 92 115 20% region but at much lower 747 2 21 23 9% 767 5 4 9 56% lease rates 777 111 58 169 66% Middle East but financing from its par- AIRBUS ent company has been an issue for DAE, which cancelled its entire order book of A300 2 2 0% Airbus and Boeing aircraft in June and A300-600 4 13 17 24% July 2011 except for a few Boeing 777 and A310 1 10 11 9% 747-8F freighters, which it will now lease A319 10 8 18 56% to Emirates Airline. The company still has A320 74 99 173 43% 41 aircraft in its leased portfolio, as seen in A321 12 25 37 32% Table 3, and although it has scaled down its A330 35 96 131 27% ambitions, it still ranks as one of the largest lessors in the region. A340 20 31 51 39% Waha Leasing is part of the Waha Capi- A380 2 18 20 10% tal group in Abu Dhabi and previously was MCDONNELL DOUGLAS known as Oasis Leasing International. It, MD-11 4 4 0% too, has big plans for growth. Its current MD-90 29 29 0% portfolio stands at 21 aircraft. In 2009, it Embraer purchased a 50% stake in Aerventure, a Dutch aircraft leasing company with 50 125 1 1 0% A320 aircraft on lease and on order com- 170 2 27 29 7% bined. It also clearly believes in the future 175 1 4 5 20% growth of the aircraft leasing business and 190 2 0 2 100% is investing for growth. 195 3 2 5 60% A look at Table 1 shows the presence of BOMBARDIER major lessors such as Gecas, ILFC, CIT Group, RAM Leasing, BOC Aviation as C-130 1 1 0% major aircraft lessors in the Middle East. CL600 1 0 1 100% Many of these big lessors do not have CRJ 8 10 18 44% an office in the Middle East. Gecas is an DHC6 4 4 0% exception, with an office in Dubai. DHC8 3 3 0% A look at the most popular leased air- craft in the Middle East shows the 777 ATR (with 111 aircraft) and the A320 (with 74) ATR42 6 6 0% to be the clear favourites. Table 3 shows ATR72 14 14 0% a breakdown of the aircraft types, owned Others and leased with AACO carriers. Narrow- TU-134 4 4 0% bodies such as A320s and 737s continue to YAK-40 6 6 0% the most popular aircraft types with lessors in the Middle East. The 111 777 aircraft is IL-76 4 4 0% in large part due to Emirates leasing 81 of Fokker 27 7 7 0% that type. Larger aircraft such as the 777 Fokker 50 4 4 0% and the A380 are more difficult to place for Gulfstream II 1 1 0% lessors, and are rarely bought for leasing Gulfstream IV 1 0 1 100% purposes. Lessors only acquire the aircraft Gulfstream V 3 0 3 100% types via sale-leaseback transactions. In 2011, there was some shrinkage Dassault Falcon 1 2 3 33% in the Middle East market, which has King Air 6 6 0% affected leasing. Aircraft lessors are still TOTAL 321 621 942 34% placing aircraft in the region but at much64 Airline Economics March/April 2012 www.airlineeconomics.com
  8. 8. MIDDLE EAST TABLE 5: AACO ENGINE FLEET – OWNED AND LEASED sector might be reducing their aviation Airline Number of Owned Operating % leased finance activity, but German, Asian, Aus- engines leased tralian and North American banks will continue to provide loan financing for US Emirates 400 164 236 59% dollar aircraft loans. Even so, the amount Saudi Arabian Airlines 316 260 56 18% of aircraft finance availability is decreasing Qatar Airways 214 132 82 38% at the same time as aircraft deliveries are EgyptAir 136 124 12 9% increasing to record levels – aircraft les- Etihad Airways 140 100 40 29% sors could pick up a lot of business over the Royal Air Maroc 118 90 28 24% next few years, but only so long as they can secure their own funding arrangements. Air Algerie 106 106 0% Meanwhile, engine leasing is also Tunisair 64 64 0% increasing in the Middle East, and is Gulf Air 78 28 50 64% providing a practical and cost-effective Kuwait Airways 68 42 26 38% solution to the spare engine problem. Royal Jordanian 78 16 62 79% This is a commonsense approach by Syrian Arab Airlines 75 72 3 4% airlines to protect their bottom line by avoiding the extra capital of spare Oman Air 52 30 22 42% engines on their balance sheets, which Air Arabia 50 16 34 68% is very high. By leasing engines, airlines Libyan Airlines 43 41 2 5% can release that liquidity, and many Middle East Airlines 34 34 0% engine lessors offer flexible options of Yemenia 29 25 4 14% short-, medium- and long-term leases. It Afriqiyah Airways 26 22 4 15% is much cheaper for the airline, as it pays EgyptAir Express 24 24 0% only a small standby charge for availabil- ity and then for actual use of the engine. Iraqi Airways 22 0 22 100% However, engine leasing can be challeng- Sudan Airways 20 16 4 20% ing and technical. Only the larger players Felix Airways 8 4 4 50% with the technical expertise have entered Total 2,101 1,410 691 33% into it, such as the big three engine origi- nal equipment manufacturers and big players such as ELFC and Gecas. Also, TABLE 6: ENGINE MANUFACTURERS – OWNED VS LEASED Mubadala Aerospace in Abu Dhabi has Manufacturer Total engines Owned Operating Leased % established the region’s first engine leas- leased ing company, Sanad Aero Solutions. GE 576 322 254 44% The region has a large new aircraft CFM 574 348 226 39% order portfolio, along with a spare engines RR 414 308 106 26% backlog, and a large portion of these will be financed through sale-and-leaseback IAE 266 186 80 30% agreements. The market size for spare P&W 137 123 14 10% engines at Middle East carriers can be Engine Alliance 80 72 8 10% estimated by counting the various aircraft Aviadvigatel 24 24 0% fleet and order sizes. Sanad Aero Solu- Ivchenko Progress 18 18 0% tions estimates the global spare engines Garrett 8 5 3 38% and components market in which it oper- ates to be as high as $35 billion and, with Allison 4 4 0% forecasts of a further 12,000 new aircraft Total 2,101 1,410 691 33% entering service by 2020, airlines would have to find $18 billion to support theirlower lease rates. The total bill for deliv- Engine leasing is also new spare engines and components.eries scheduled this year will rise to $95 Table 5 shows the commercial enginesbillion and reach $106 billion in 2013, increasing in the Middle East, fleet in operation with AACO airlines inaccording to Boeing’s forecast. With the and is providing a practical the Middle East, which gives an idea abouteurozone crisis spreading, established how many spare engines could be in use.European aviation financiers are pulling and cost-effective solution to With a total of 2,101 engines in service asback from the market due to a lack of capi- the spare engine problem of December 2011, 5% spares would be 105tal and liquidity. French banks that have engines and 10% spares would be 210. Ofhistorically been lending to the airline these 2,101 commercial engines in service,www.airlineeconomics.com Airline Economics March/April 2012 65
  9. 9. MIDDLE EASTTABLE 7: COMMERCIAL ENGINE FLEET AACO AIRLINES – OWNED AND LEASEDAirline (Fleet) Engine Total engines Owned Operating Lease % manufacturer leasedEmirates (162) CFM 32 0 32 100% Engine Alliance 80 72 8 10% GE 152 30 122 80% RR 136 62 74 54%Saudi Arabian Airlines (138) CFM 82 26 56 68% GE 104 104 IAE 58 58 RR 72 72Qatar Airways (103) GE 116 58 58 50% IAE 76 52 24 32% P&W 6 6 RR 16 16EgyptAir (65) CFM 54 54 GE 16 4 12 75% IAE 34 34 P&W 12 12 RR 20 20Etihad Airways (59) CFM 2 2 GE 18 8 10 56% IAE 28 2 26 93% RR 92 88 4 4%Royal Air Maroc (56) CFM 96 76 20 21% GE 14 6 8 57% P&W 8 8Air Algerie (52) Allison 4 4 CFM 44 44 GE 16 16 P&W 28 28 RR 14 14Tunisair (32) CFM 58 58 GE 6 6Gulf Air (31) CFM 50 16 34 68% GE 8 0 8 100% RR 20 12 8 40%Kuwait Airways (27) RR 6 0 6 100% CFM 26 22 4 15% GE 26 20 6 23% P&W 2 0 2 100% RR 8 0 8 100%Royal Jordanian (27) CFM 16 0 16 100% GE 24 16 8 33% IAE 30 0 30 100% P&W 6 0 6 100% RR 2 0 2 100%Syrian Arab Airlines (27) Aviadvigatel Perm Motors 24 24 Garrett 3 0 3 100% IAE 12 12 Ivchenko Progress 18 18 P&W 18 18Oman Air (26) CFM 30 8 22 73% GE 4 4 P&W 4 4 RR 14 14Air Arabia (25) CFM 50 16 34 68%Libyan Airlines (19) CFM 8 8 Garrett 3 3 GE 18 18 P&W 12 10 2 17% RR 2 2Middle East Airlines (17) Garrett 2 2 IAE 24 24 RR 8 8Yemenia (14) IAE 4 4 P&W 21 21 RR 4 0 4 100%Afriqiyah Airways (12) CFM 22 18 4 18% GE 4 4EgyptAir Express (12) GE 24 24Iraqi Airways (10) CFM 4 0 4 100% GE 18 0 18 100%Sudan Airways (9) P&W 20 16 4 20%Felix Airways (2) GE 8 4 4 50%66 Airline Economics March/April 2012 www.airlineeconomics.com
  10. 10. MIDDLE EAST33% are leased by the airlines versus 67% The growth of regional aircraft airlines clearly see the value in engine leas-airline-owned. ing. Sanad’s portfolio consists of 12 spare Engines are leased to improve the and engine leasing companies engines with Air Berlin (on SLB) and ause of these expensive spare assets. By shows the Middle East is total of 11 spare engines with Etihad Air-entering a pooling arrangement with a ways, including two future deliveries.lessor, airlines and lessors can increase maturing in the services Table 6 provides numbers for activethe percentage use of an engine, making offered for commercial aircraft engines by OEMs and the leased-ver-more revenue by flying it on an aircraft. sus-owned breakdown of those engineIf an airline is aware, through mainte- financing. Access to capital for numbers. GE, CFM and Rolls Roycenance planning, that it will need spare aircraft will be a major issue dominate as engine OEMs in the region. Aengines, it will manage demand by leas- for the growth plans of the more detailed breakdown of engine OEMing them through an engine lessor. Ideally, by airline with owned and leased details isan airline would not want to keep spare provided in Table 7 for all AACO airlines.engines on standby for their maintenance The growth of regional aircraft anddemands but would rather sign with up an nent solutions. Clearly, they believe the engine leasing companies shows the Mid-engine lessor that could provide a broad integrated approach of bundling spares dle East is maturing in the services offerednetwork of engines across its routes or with MRO services is a winner and a cor- for commercial aircraft financing. Accessan engine pooling solution to help it with nerstone to growth. to capital for aircraft will be a major issueits needs at its base. Another interesting Recently, Sanad and another engine for the growth plans of the region’s airlines.approach is to provide an engine leasing lessor, ELFC, signed a sale-and-leaseback Despite the challenge of aircraft financingpool of spares and components along with agreement worth $367 million with Eti- worldwide, the region will continue to findmaintenance repair and overhaul (MRO) had Airways to finance 16 in-service spare finance albeit at a higher capital or inter-services. Mubadala’s MRO network com- engines and seven future spare engine est cost. The increased leasing practices ofprising SR Technics, Abu Dhabi Aircraft deliveries. Sanad will buy and lease back the AACO airlines and growth of leasingTechnology and Sanad offer those both for five GE90 and six Rolls Royce Trent 500 businesses point to the fact that financingengines and components through their engines on a 10-year operating lease to might not be a material barrier to marketintegrated engine and integrated compo- Etihad Airways. This does indicate that entry or expansion for this region.www.airlineeconomics.com Airline Economics March/April 2012 67
  11. 11. DATA COMMERCIAL AIRCRAFT CMVs AND LEASE RATES – 15TH March 2012 CMV ($M) Dry Lease rate ($m) Typical seating Manufacturer Model Oldest change Newest change Oldest change Newest change (C+Y) AIRBUS A300-600R 6.33 0.33 15.00 2.51 0.105 0.025 0.200 267 AIRBUS A310-200 1.85 2.40 0.070 0.100 210 AIRBUS A310-300 3.90 0.54 8.90 1.89 0.090 0.010 0.140 0.01 210 AIRBUS A318-100 14.00 0.21 24.50 2.63 0.130 0.030 0.200 0.03 108 AIRBUS A319-100 12.50 2.24 34.50 0.83 0.130 0.030 0.320 0.03 124 AIRBUS A320-200 5.50 0.07 40.00 1.53 0.065 0.055 0.350 150 AIRBUS A321-100 12.00 1.92 19.00 2.2 0.120 0.030 0.220 0.01 185 AIRBUS A321-200 21.00 5.40 49.00 0.5 0.200 0.030 0.380 0.05 185 AIRBUS A330-200 44.00 4.86 86.00 2.46 0.420 0.050 0.850 0.25 250 AIRBUS A330-200F 90.00 4.44 96.40 0.05 0.750 0.020 0.800 0.06 AIRBUS A330-300 27.00 2.70 97.00 1.84 0.280 0.190 0.900 0.24 300 AIRBUS A340-200 15.00 0.86 20.00 2.09 0.300 0.070 0.350 0.64 280 AIRBUS A340-300 18.00 0.97 70.00 2.41 0.230 0.020 0.600 0.09 295 AIRBUS A340-500 55.00 2.82 97.00 14.94 0.490 0.010 0.850 0.9 280 AIRBUS A340-600 58.00 5.33 104.00 8.55 0.530 0.030 0.920 0.15 350 AIRBUS A380-800 145.00 14.76 195.00 15 1.450 0.350 1.850 0.42 525 BOEING 717-200 7.75 11.50 3.1 0.100 0.150 0.01 117 BOEING 737-300 2.00 0.97 6.80 0.94 0.040 0.040 0.110 0.03 134 BOEING 737-400 4.00 0.39 8.00 1.08 0.075 0.050 0.120 0.01 144 BOEING 737-500 2.50 1.09 6.00 1.57 0.050 0.090 0.02 104 BOEING 737-600 11.00 3.03 20.00 2.75 0.135 0.015 0.200 103 BOEING 737-700 16.20 1.31 35.75 2.68 0.160 0.050 0.330 0.01 134 BOEING 737-800 20.00 1.10 44.50 5.07 0.220 0.030 0.360 0.04 160 BOEING 737-900 19.80 0.70 24.00 0.11 0.170 0.040 0.230 0.01 180 BOEING 737-900ER 33.50 3.52 47.40 3.85 0.320 0.050 0.400 0.02 215 BOEING 747-400 18.00 0.69 59.50 2.25 0.300 0.010 0.670 0.01 412 BOEING 747-8F 185.00 9.25 1.400 0.050 1.550 0.15 188 BOEING 757-200 6.00 0.20 22.50 2.13 0.100 0.230 0.04 158 BOEING 767-200ER 4.00 0.25 14.50 2.25 0.120 0.040 0.280 0.09 190 BOEING 767-300ER 11.00 2.28 61.50 9.41 0.180 0.050 0.500 0.02 313 BOEING 767-300F 30.00 0.12 73.52 0.86 0.340 0.810 0.580 0.01 BOEING 777-200 24.00 57.00 0.350 0.450 313 BOEING 777-200ER 47.70 4.72 118.00 9.03 0.500 0.080 0.990 0.13 313 BOEING 777-200LR 91.00 11.71 136.50 3.28 0.800 0.080 1.200 0.25 313 BOEING 777F 140.00 10.80 160.00 2.4 1.200 0.020 1.400 0.15 BOEING 777-300 47.75 3.38 78.00 7.64 0.450 0.120 0.700 0.06 382 BOEING 777-300ER 96.50 6.33 155.00 0.3 0.850 0.500 1.400 0.35 350 BOEING 787-8 105.00 12.40 110.00 7.44 0.950 0.150 1.100 0.21 243 BOEING MD MD11 10.00 3.79 17.00 2.31 0.150 0.100 0.240 0.07 285 BOEING MD MD81 0.50 1.00 1.20 0.4 0.025 0.005 0.035 0.005 144 BOEING MD MD82 0.70 0.93 2.20 0.03 0.025 0.050 0.048 0.008 144 BOEING MD MD83 1.30 0.05 3.25 0.11 0.040 0.100 0.060 0.02 144 BOEING MD MD87 1.70 0.20 2.20 0.030 0.042 0.001 109 BOEING MD MD88 1.90 0.41 3.20 0.31 0.400 0.050 0.01 144 BOEING MD MD90 5.00 0.98 6.00 0.53 0.080 0.100 0.01 144 BOMBARDIER Q400 10.00 20.00 0.125 0.200 70 EMBRAER E190 LR 20.00 30.20 0.200 0.270 98 EMBRAER E195 LR 22.90 31.70 0.210 0.290 108 AE Research. ATR ATR 42-500 4.30 14.30 0.065 0.135 48 ATR ATR 72-500 6.75 18.10 0.085 0.180 70 ATR ATR 42-600 14.95 0.145 48 ATR ATR 72-600 19.20 0.190 70Note: These values are based on the lowest prices seen in market of late showing change over six months from 01/10/11 to 01/03/12.The change in red represents a decrease while green is an increase from the last known lowest price paid. These values shown here in this issue arenow market averages. They are in fact the lowest known prices paid on a deal involving each type. Where no change is shown we have either not beenable to gain price on a transaction during either this period or the last six months ago. The value changes on some aircraft represent manufacturerreductions due to reporations on deals where we know of pricing. The general trend is one of lower prices from six months ago, mainly during the lastcalender quarter of 2011, as always it is very important to remember that the rates listed are set by the most competitive deal in the market.68 Airline Economics March/April 2012 www.airlineeconomics.com

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