Monday 16 July 2018

Fly Leasing reveals it has $2bn for fleet growth

Fly Leasing’s Colm Barrington
Fly Leasing’s Colm Barrington
John Mulligan

John Mulligan

Dublin-based aircraft lessor Fly Leasing, which is headed by former Aer Lingus chairman Colm Barrington, has confirmed that it has $2bn available to expand its fleet as it eyes further jet purchases in 2018.

Fly Leasing currently has 84 aircraft in its fleet, primarily narrow-body, single-aisle jets such as Airbus A320s and Boeing 737s.

However, it also has a small number of long-haul aircraft on its books, including Airbus A330s and Boeing 777s. The fleet is valued at more than $3bn.

Fly Leasing, which is listed on the stock market in New York, has sold 72, older, less profitable aircraft since 2015. It told investors at a Goldman Sachs aircraft-leasing conference in New York that it has invested $1.6bn in 30 younger jets in the same period.

In a presentation at the conference this week, Fly Leasing said that it has an "annual growth target of $750m" and will continue to eye opportunistic secondary market purchases.

From the beginning of 2017 to the end of November, Fly Leasing said that it has spent $456m on aircraft, and identified more than $40m of potential purchases for 2018.

It's focusing on aircraft such as Boeing 737 Max jets.

Fly Leasing has also been restructuring its business by optimising its capital structure and reducing the management fees it pays.

Global aircraft management company BBAM manages and services the Fly Leasing fleet. BBAM shareholders also own 14pc of Fly Leasing.

In September, Singapore wealth fund GIC - which owns 16pc of Irish telecoms firm Eir - agreed to buy a 30pc stake in BBAM.

Prior to that, BBAM's management team owned 50pc of the company. Mr Barrington, a former senior GPA executive, is also a shareholder of BBAM.

The other 50pc of BBAM was owned by Canadian private equity firm Onex, which acquired that holding in 2012.

Onex confirmed last month that it sold a 15pc stake of its BBAM holding to GIC, and that since it first took a stake in BBAM, Onex has realised $454m from the investment, including the disposal proceeds.

"GIC's involvement will add to BBAMs resources and capabilities particularly in Asia, an important part of the market for these aircraft," said Onex CEO Gerry Schwartz.

"Strategically the partnership builds on a first mover advantage as the world's largest dedicated manager of leased aircraft," he added.

Fly Leasing's customers include airlines such as India's SpiceJet, and Malaysia Airlines.

Mr Barrington is also a non-executive director of Finnish airline Finnair, and Irish property investment firm Hibernia REIT.

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