BOC Aviation Expands Fleet at Bargain Prices

Source: Cargonews Asia    Author:    06/15/2009

Subject Concerned: Aircraft   

BOC Aviation, the aircraft-leasing arm of Bank of China, is taking advantage of the downturn in the airline industry and lower aircraft costs to rapidly expand its fleet while its rivals have been grounded, the South China Morning Post reported.

Chief executive Robert Martin said the company had bought 40 planes since December and by 2012 would have invested US$10 billion on aircraft, more than doubling the current fleet size from 96 to 196.

The credit crunch has forced many airlines to sell aircraft to the lessors and then lease them back.

However, the largest aircraft leasing company, International Lease Finance Corporation, has been put up for sale by its parent, troubled United States insurance giant American International Group, while other lessors have been having trouble obtaining financing for aircraft acquisitions.

This has left the field open for BOC Aviation to expand.

With the backing of Bank of China, BOC Aviation acquired the 40 planes for US$2.4 billion from airlines in the US, Germany and France.

It was 30 more than had been originally planned, Mr Martin said, but the bargain prices were too good to miss. All the planes' purchase and leaseback contracts were signed under floating rates to reflect any future increase in the cost of borrowing.