Japan's MUFG launches aviation finance business in the Americas

Wed Oct 26, 2016 4:57pm EDT
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By Jeffrey Dastin

(Reuters) - Mitsubishi UFJ Financial Group Inc (8306.T: Quote) has launched a new business in the Americas to help airlines and other companies finance the purchase of planes, company executives told Reuters.

The move highlights how large players in the aviation industry like MUFG remain confident that more travelers will take to the skies and that airlines will buy more aircraft, despite signs that demand for new jetliners is falling.

Tokyo-based MUFG currently has aviation finance practices in Asia and Europe.

"There are substantial needs in this space," said Olivier Trauchessec, managing director of the new unit, in a telephone interview Monday. "There's been a steady increase in aircraft orders over the past several years... (and) there is a very large number of aircraft that still need to be replaced."

In July, U.S. plane maker Boeing Co (BA.N: Quote) forecast that airlines in the Americas would require 11,290 new planes over the next 20 years to replace aging aircraft as well as grow their fleets, representing a large opportunity for manufacturers and financing companies alike.

The region is only second to Asia, which will require 15,130 planes, according to Boeing. Nearly 40,000 aircraft in total will be delivered through 2035, worth $5.9 trillion, Boeing said.

MUFG provides debt to airlines, plane lessors and others through underwriting, export credit financing and other means.

Trauchessec said MUFG also can benefit from the active trading between aircraft lessors and investors in the Americas.   Continued...

A man walks out form a branch of the Mitsubishi UFJ Financial Group's bank of Tokyo-Mitsubishi UFJ in Tokyo, Japan, February 1, 2016. REUTERS/Yuya Shino