Page 22 - AAA JANUARY - FEBRUARY 2014 Online Magazine

FEATURE LEASING

Norman Liu, GECAS leasing Leo Varadkar, Irish Transport Minister

growth by delivering the airplanes and when it comes to crystal ball gazing and
services that its airline customers need predicting trends, they often consult with
financing watch- to be successful,” he says. And the proof the manufacturers on what would likely be
the latest trends and developments. And
of the pudding is in the deals being done;
words for next year US-based GECAS (General Electric they pass those nuggets of information in
are realignment Capital Aviation Services) spends some a totally unbiased way on to the potential
and balance US$7billion each year on new aircraft lessors in the form of aircraft, lease and
for lease, along with sale and leaseback
operating suitability too – acting more
contracts, and has some 1,700 aircraft on like a consultancy and not just a financial
its books leased to 225 carriers. provider. “We invest with caution,”
Indeed, such is the experience (and admits Norm Liu, GECAS CEO. “There
buying power) of the lease companies is only so much sensible business in the
marketplace today.”
Indeed, as Boeing Capital
Corporation’s MD for Capital Markets
Cape Town convention Development Kostya Zolotusky says,
The Cape Town Convention is a basic treaty between countries that agree to a “the financing watchwords for next
common legal definition and process of law as regards mobile property – in this year are realignment and balance.
case aircraft. If leased aircraft could simply be flown across a border, parked – or Realignment as in the dollars used to
used – and there was little legal redress or chance of repossession, the leasing pay for new airplanes moving from one
business would not exist. Signed into being in 2006, the first subscribers were funding source to another, with banks
Ethiopia, Ireland, Malaysia, Nigeria, Oman, Panama, Pakistan and the United and other commercial market sources
States. This allowed Ireland and the US to take the lead, much in the way
Panama and Liberia did with maritime leasing and flagging. Since the, another growing in their contributions” rather
fifty states have joined up to protect owners (and lessors) rights to aircraft no than airlines stumping up their own cash
matter what tarmac they are sitting on. The knowledge that if everything goes to satisfy steady air travel demand and a
chocolate side down (Kingfisher, anybody?) the aircraft owner can take it back replacement market driven by new, more
home and re-lease it to keep the income stream gives a feeling of economic fuel-efficient airplanes. Good news for
confidence. It also means borrowers can raise funds more cheaply for a lease the leasing companies.
if they are located in a country which has ratified the Cape Town Convention, as
they are seen as more reliable. There are moves to update the Convention to Irish wings
“Alternative A”. This says that, if an airline goes bust, it has 60 days to pay up and So you have put your name on the aircraft,
if not then it has to give them back. In a time of aircraft shortages, this is a big
plus for lessors. Interestingly, although the mechanics of leasing are becoming decided what kind of lease to go for,
less Irish, the Irish High Court has become the arena of choice (in fact appointed and now you just need to find the right
by the Convention members) for international aircraft leasing disputes, rather company. Where to look? Easy: Ireland.
like London has become the libel legal centre of the world. Why Ireland has become the epicentre
of leasing for the entire world is part luck,
22 ASIAN AIRLINES & AIRPORTS JANUARY / FEBRUARY 2014 WWW.ASIANAIRLINES-AIRPORTS.COM