Avolon Leasing Group, an aircraft leasing company whose customers include AMR Corp. (AMR)’s American Airlines and Ryanair Holdings Plc (RYA), expects French and German banks to reduce lending for financing planes.
“Our expectation is that the French and German banks will remain active, but not as much as in previous years,” Chief Executive Officer Domhnal Slattery said in an interview.
European Aeronautic, Defence & Space Co., the parent company of Airbus SAS, the world’s biggest commercial plane manufacturer, has sought to reassure investors that lenders aren’t retreating from the aircraft market. Shares of the company fell 4 percent last month amid speculation that banks are cutting lending to shrink their balance sheets to comply with tougher banking regulations.
Avolon signed a $300 million funding deal yesterday with the government of Singapore Investment Corp., boosting the total capital it has raised to $4 billion. The Dublin-based company has already secured financial backing from private equity companies including Cinven Ltd. and CVC Capital Partners Ltd.
The leasing company is diversifying its funding base and has seen a “reawakening” of Japanese banks, driven by the strength of the yen in relation to the dollar, Slattery said late yesterday. The Japanese currency is trading at a postwar high against the U.S. currency.
Avolon currently has a fleet of 88 aircraft consisting mainly of narrow-body Airbus A320-200 and Boeing Co. (BA) 737-800 airplanes. The leasing company intends to increase the number of planes in its portfolio to 150 by the end of this decade.
The world’s two largest aircraft lessors are General Electric Co. (GE)’s Gecas unit, and International Lease Finance Corp.