Rising North American plane demand boosts leasing market: BOC Aviation

Tue Aug 26, 2014 6:00am EDT
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By Anshuman Daga

SINGAPORE (Reuters) - A pick-up in North America's aviation market is providing a boost for the leasing industry as demand from Southeast Asian airlines starts to slow, according to the head of BOC Aviation, Asia's second-biggest aircraft lessor.

"Now, what we are particularly seeing is the growth rate has picked up in North America," Robert Martin, chief executive and managing director of the fully-owned leasing subsidiary of Bank of China Ltd (601988.SS: Quote), told Reuters in an interview.

Speaking after the lessor placed the biggest order in its 20-year history, for 82 Boeing (BA.N: Quote) jets worth $8.8 billion at list prices, Martin said North American carriers are driving demand for newer, fuel-efficient aircraft as they replace ageing planes.

"Now that the airlines have consolidated there, they are going to be very profitable," said Martin, an industry veteran of more than 25 years, who has overseen Singapore-based BOC Aviation's rise to become the world's fifth largest lessor by fleet value after joining the company in 1998.

Lessors such as BOC Aviation, which place their aircraft with airlines globally, are emerging as important customers for plane makers. Industry publication Flightglobal estimates the top 50 lessors have a total fleet valued at nearly $200 billion.

The global airline industry is forecast to make a profit of $18 billion in 2014, with North America alone making up half of the profit, data from the International Air Transport Association shows. The top four U.S. carriers, all the products of mergers and acquisitions, have put the sector on a sound financial footing.

BOC Aviation, formed after Bank of China acquired the Singapore Airlines-backed company in 2006, had an estimated fleet value of $8.9 billion in 2013, according to Flightglobal.

Japanese-owned SMBC Aviation Capital is Asia's biggest lessor, with a fleet valued at $9.4 billion. Monday's order by BOC Aviation came weeks after SMBC Aviation placed its own company-record order for 115 Airbus (AIR.PA: Quote) jets.   Continued...

Workers on lifts are pictured near the tail of a Boeing 787-8 Dreamliner being built for for Xiamen Airlines in Everett, Washington August 7, 2014. REUTERS/Jason Redmond