Page 24 - AAA JANUARY - FEBRUARY 2014 Online Magazine

FEATURE LEASING

such as aircraft maintenance and leasing.” deputy president and Head of International
Add to this Ireland’s early support for the Banking at Sumitomo. But with money like
Cape Town Convention, an international that mentioned previously being made,
agreement governing aircraft (or more other countries are eyeing the business
accurately, moveable assets) leasing closely. Leasing is looking East.
and it’s easy to see why the industry has
flocked to the Emerald Isle. Asian expansion
This concerted push into the expanding According to a one report, Singapore
leasing industry has seen Ireland clinch poses the biggest threat. With excellent
some 20% of the global leased fleet infrastructure, plenty of land and some
(20,000 aircraft), and rack up around of the most rapidly expanding airlines in
US$150 billion in assets in the process, the world, it has all the ticks in the boxes.
according to the Irish Aviation Research “Singapore offers clear advantages to
Institute. Major corporations like Bank of those aircraft leasing operations seeking
China, Sumitomo Bank, AWAS, Airbus, GE an Asian base, whether because of the
Dick Fosberg, Avolon Leasing
and more have all set up shop or bought increasing demand for commercial
into the clustered advantages Dublin and aircraft in Asia or the growing strength
Shannon offer. and significance of Chinese financial
“We are looking forward to building on institutions,” says Conor Keaveny of
what is an already extremely robust and accounting company Dillon Eustace.
successful business, and are very pleased However, there are the issues of industry
that such a capable business unit with a experience, business connections, and
strong track record of delivering growth cross-border treaties to consider with
and profitability throughout the economic respect to both tax, and ownership disputes
cycle has joined us,” says Mike Minoura, - as per the Cape Town Convention (see
sidebox). Nonetheless, the physical
proximity to the biggest markets and
Have your cake AND eat it too strong track record of legal probity (and
Sale and leaseback is becoming more and more popular, especially from an certain exemptions from withholding tax)
accounting perspective for airlines with heavy fluctuations in either income or are allowing Singapore to edge into the
liabilities. In this situation, the operator that owns an aircraft (it can either be market. BOC is increasingly looking at
an existing part of the fleet or a new delivery) sells it to a leasing company, then doing deals from there as well as from
immediately signs a lease for the same aircraft. “A sale-leaseback provides you its established Dublin base, and other
with a cash infusion and helps improve your balance sheet,” explains GECAS.
“Fundamentally, a business sells its aircraft … and then immediately leases the big players are also weighing in the shift.
aircraft back, maintaining their right to use it.” This can be because the operator Phoenix, AWAS, Aviation PLC,
thinks the equity tied up in the aircraft is more useful spent on something else. LCI Aviation (which leases aircraft to
The cash from the sale can be used to pay down debt, enhance liquidity, invest in Singapore Airlines), Macquarie, SMBC,
other assets or prepare for potential acquisitions. AerCap and more are all active from the
region’s city-state – which is expanding
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