Aviation Finance
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Aviation Finance - Vol 2 No.10 May 10th 2012
Fleet Management

The asset management skills needed for slow-growth Europe

In the past fortnight we have witnessed a wide range of developments that underline the challenge facing commercial aviation in Europe - with the impact of these developments on the aircraft leasing community both mixed and complex. And with short-term financial pressure resulting in some European airlines delaying fleet renewal and expansion lessors must assess what implications this has for supply and demand, writes Joe Gill.

Quoted Lessors

Fly Leasing gives insight into widebody potential and how they are managing out of production aircraft

Fly Leasing reported Q1 results in early May that showed; (1) a 115 per cent rise in revenues to $104.5m which reflects an increased size of the fleet; (2) adjusted net income of $26.8m compared to $3.7m in Q1 2011; (3) a 10 per cent increase in dividends and approval to replace an existing $25m share repurchase programme. The conference call that accompanied its results also brought valuable insights to some of the dynamics that are flowing through the aviation financing community as it enters the middle of 2012, Joe Gill reports.

Taxation

Legal opinion of Advocate General of the ECJ on the 'look through' exemption welcome news for lessors

The ECJ's release of the legal opinion of the Advocate General is welcome news for the aviation leasing sector as it maintains the 'look through' exemption that means that the supply of aircraft to companies who do not operate the aircraft themselves should not be liable to VAT, according to Ernst and Young's Brian Keenan.

Airline Financing and Developments

Air India looking to raise $1.1 billion for aircraft and working capital

Following a decision by the Indian Government to allow its domestic airline industry to raise up to $1 bn to meet working capital needs Air India has announced plans to raise $600 mn for working capital and is also seeking to raise a further $500 mn in a bridge loan to allow it to take delivery of four Boeing Dreamliners. Taiwan airline EVA, is to take delivery of 7 Boeing 777s to upgrade its fleet while Delta Airlines has taken a major step to take control of its fuel costs.

  
Aviation Finance Vol. 2 No.10

In this issue

There is an Asian flavour to this week's issue of Aviation Finance, not inappropriate when we think of the continued travails of the eurozone, and indeed the United States' travails too, as shown by the latest US jobs statistics, and Wall Street's retreat. So, while, our coverage of publicly quoted companies in the aviation complex in this issue relates the often poor news coming from the aviation industry, it should be remembered that the probems are not endemic to the sector but economy-wide.

Perspectives

ICBC Leasing - the $2 billion dollar backed start up

ICBC Leasing, the leasing arm of the Industrial and Commercial Bank of China Ltd, the world’s largest bank in terms of profit and market capitalisation, is leading the international thrust of China's aircraft leasing industry, and is already making waves, for example pricing the purchase of 48 aircraft from Airbus in yuan last August. It has established its first aircraft leasing hub outside of China, in Ireland, and, following the recent signing of an MOU between the company and the Irish Government in Beijing, is planning to use the platform for future growth. Alex Hou, deputy general manager of ICBC International Leasing, spoke exclusively to Aviation Finance about its plans.

Order Books

Aircraft backlogs can be read in two ways

Data on aircraft backlogs produced by Bloomberg Industries highlights key themes across the commercial aircraft marketplace. These datapoints can be interpreted both positively and negatively regarding the future prospects for OEMs and leasing companies, with the impact of the introduction of new technology airplanes causing steep reductions in backlogs of older generation aircraft, writes Joe Gill.

Lessor Financing and Developments

Wells Fargo Securities: FLY leasing is undervalued

Wells Fargo Securities has initiated coverage of listed aircraft lessor FLY Leasing with an outperform rating. Elsewhere, Air Lease Corporation (ALC) has taken steps forward in developing its capital structure thanks to a new revolving credit facility, while Airbus' head of financing says French banks have remained active in aircraft financing, but have shifted their roles to structuring rathering than financing transactions.