IRISH AVIATION leasing firm Avolon has placed its second multi-billion dollar order for new aircraft in as many days, with a combined list-price of $3.7 billion (€3 billion).
The two-year-old firm announced a deal to buy 15 narrow-bodied aircraft from Airbus yesterday, just 24 hours after it announced a 30-aircraft deal with Boeing. However, chief commercial officer with Avolon John Higgins dismissed the manufacturers’ list prices as a “headline number”.
“The actual prices are at a significant discount to the list price, and I do mean significant – not token.”
Avolon currently has a committed fleet of 105 aircraft, 84 of which have been delivered by the manufacturer and placed with airlines.
The new orders bring Avolon’s portfolio to 150 aircraft, a target that was originally set for 2014. The company’s existing fleet is valued at $4.9 billion.
Total raised capital for the Dublin-based company currently stands at $4.6 billion, of which shareholder equity accounts for $1.4 billion. The remainder is “committed debt”.
Mr Higgins said the new orders, which will be delivered over a six-year period beginning in 2015, would be financed through a combination of retained earnings, the company’s existing equity base and new debt. “But you don’t put debt in place now for planes that are being delivered in five, six or seven years’ time,”
Avolon counts Singapore’s Government Investment Corporation, Cinven, CVC Capital Partners and Oak Hill Capital Partners among its shareholders.
News of Avolon’s combined order for 45 new aircraft coincided with an announcement by United Airlines that it had placed an order for 150 737s with Boeing yesterday. The Seattle-based manufacturer described the deal as “historic”.
Both Boeing and Airbus – the world’s largest manufacturers – have large order backlogs for their narrow-bodied aircraft which are used for most short and medium-haul flights. Their most recent models have a much lower fuel burn than previous technology, giving airlines an incentive to move old aircraft out of their fleet.
Mr Higgins rejected the suggestion that Avolon’s growth plans are ambitious.
“It’s not really. If you take the business we’ve developed over the past two years – we have $4.9 billion of planes financed and sitting on our books. That’s over 80 planes in two years.
“With these orders our growth is secured to the end of this decade. In the context of what we’ve done in two years that’s not a significant financing requirement.”