IRISH AIRCRAFT leasing group Avolon yesterday signed a deal with Boeing for the delivery of 12 “next generation” 737-800 jet aircraft with a list price of $920 million.
The deal was signed at the Farnborough air trade show in Britain yesterday and afterwards chief executive Dómhnal Slattery said Avolon was likely to seek to raise more than $1 billion in new debt and equity capital next year to fund its continued growth.
“We’ll need to go and raise more debt next year,” he said, adding that markets were “still fragile”. “But we’ve proved our ability to raise money in these markets, so we’ll see.”
This was a reference to Avolon securing $1.4 billion in capital funding for its launch earlier this year.
This included $750 million in equity from private equity groups Cinven, CBC Capital Partners and Oak Hill Capital Partners.
Mr Slattery said Avolon would probably seek to raise an additional $750 million in debt and about $300 million in fresh equity from its backers.
The first of the Boeing aircraft will be delivered in 2012, with staged deliveries over the following two years.
While the 12 Boeing aircraft have a list price of $920 million, Avolon is likely to have secured a discount of up to 30 per cent from the US manufacturer, according to industry sources.
Neither Avolon nor Boeing was willing to comment.
Mr Slattery said the deal was hugely significant for the leasing company, which is based in Ballsbridge, Dublin.
“It demonstrates our credentials in the industry, which is important globally,” he said. “In relative terms, it’s a small deal but it’s a first step and an important step for us.”
Jim Albaugh, president and chief executive of Boeing Commercial Airplanes, described Avolon’s order as an “exciting development in the leasing space”.
“It’s another signal that our industry is recovering,” he added.
Mr Slattery said he expects to place about half of the 12 aircraft with carriers in Asia, typically on leases of eight to 10 years. “There’s also a number of European airlines planning for growth,” he said.
Avolon said yesterday that a number of other sale-and-leaseback transactions are at an “advanced stage of discussions” with airlines globally.
Avolon has 35 aircraft on its books, including the new Boeing planes.
“I would expect us to have probably another 15 aircraft on the books by the end of the year at the latest,” Mr Slattery said.
This will involve another “$600 million commitment” and give it about “$2 billion worth of kit” in its fleet.
