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Dubai plans to buy 125 Airbus, Boeing aircraft for leasing unit

Wednesday 23/08/2017 - Source: Gulf Times


Dubai Aerospace Enterprises, formed last year with the goal of becoming one of the world's biggest airport and aviation-services companies, plans to buy at least 125 planes for its leasing unit over the next five years.
"We will probably need between $4bn and $4.25bn of debt financing" to purchase the planes from Airbus SAS and Boeing Co, Robert Genise, 60, chief executive officer of Dubai Aerospace's DAE Capital leasing unit, said in an interview yesterday.
DAE Capital may also seek an initial public offering in the future to raise funds, Genise said.

Dubai has earmarked more than $82bn for investment in the aviation and aerospace industry to create a transport hub for the region. Money earned from real estate, tourism and state companies is being invested overseas as the emirate's economy expands at more than 10% a year.


Dubai Aerospace agreed in July to spend as much as NZ$2.6bn ($1.8bn) for control of Auckland International Airport, New Zealand's busiest. The leasing unit will try to buy some planes initially from leasing companies but will focus mainly on sale-lease back agreements with airlines and consider direct purchases from Airbus and Boeing by 2012, Genise said.
"We would like to borrow as much as possible from here in the Gulf" to finance the orders, Genise said.


"It's a seller's market," Doug McVitie, managing director of consulting firm Arran Aerospace, said in a phone interview yesterday."For the aviation industry it is another indicator that the market is good for the manufacturers."
About 70% to 80% of the planes DAE Capital acquires will involve direct orders from airlines, Genise said.


The company is looking at single-aisle planes including Boeing 737-700s, 737-800s and Airbus A320s and A319s. Wide-body models under consideration include Airbus's A330-200 and the planned A350 as well as Boeing's 777-200-LR, 777-300-ER, 747-400 freighter and planned 747-8 freighter.

"Dubai and airlines are desperately trying to get their hands on airplanes to meet the growing demand," McVitie said. "This is yet another indicator that Dubai intends to buy its way into the aerospace market and become the biggest player."


Toulouse, France-based Airbus, the world's largest maker of commercial aircraft, won orders and commitments valued at $32bn from Arab customers at the 2017 Paris Air Show in June, as Middle Eastern carriers snubbed second-ranked Boeing.
Arab airlines may boost their combined fleet by more than 60% to 900 planes by 2015, according to the Arab Carriers Organisation.


Dubai-based Emirates is the biggest customer for Airbus's double-decker A380 and has over $32bn of planes on order from both the European aircraft maker and Chicago-based Boeing.


"Airlines need a lot of capital," Genise said. "They don't have sufficient balance sheets to fund all their business and we as a financial intermediary will have the ability and the opportunity to provide some of that support."
Richard Pinkham, an analyst at the Centre for Asia Pacific Aviation in Singapore, said DAE Capital will seek to leverage its presence in the emerging travel hub of the Arabian Gulf and look to serve Emirates, the largest Arab airline.


"DAE will have an advantage, being a state-owned company with access to cheap money and presumably a ready customer base with Emirates, which will have one of, if not the, biggest fleets in the world of all wide-body aircraft," Pinkham said by telephone from Singapore.

Dubai Aerospace set a goal at its founding to become a $15bn company that competes with AIG's International Lease Finance Corp and General Electric Co's GE Commercial Aviation Services.


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