FLY Fly Leasing Limited

By Doug Cameron 

AirAsia Bhd. will sell up to 182 Airbus SE jets to a group of leasing companies and financial investors in a $1.2 billion deal--one of the biggest aircraft-finance transactions recorded.

BBAM, one of the world's largest aircraft managers, Ireland-based Fly Leasing Ltd. and their partners will buy planes already flying for the Malaysia-based low-cost carrier. The group also has options to acquire new AirAsia jets due to be delivered over the next three years.

The deal highlights the funding that has flooded the aircraft sector over the past three years, with rising deliveries of large jetliners requiring $139 billion in 2018 alone, according to Boeing Co. Funding needs are forecast to top $150 billion next year.

AirAsia has a fleet of more than 200 jets and runs a group of airlines tapping rapid growth that Boeing estimates added 100 million new passengers in the region last year. It is the second-largest Airbus customer, with outstanding orders for almost 400 planes and plans to expand into China.

The existing jets and orders involved in Thursday's deal are tied to AirAsia's wholly-owned leasing arm, which it has been seeking to sell for more than a year. AirAsia will lease all but one of the jets back from the buyers.

Airbus and Boeing have order books for their best-selling single-aisle planes stretching seven years or more, even with planned production increases, making them attractive assets for investors.

Fly Leasing will pay $1 billion for the first batch of 55 Airbus jets and sell a 10% stake in the company to Air Asia, assuming options on 20 yet-to-be-delivered A320neo planes. Onex Corp., a Canadian asset manager, will also inject fresh equity into Fly Leasing, boosting its stake to 17%. BBAM manages Fly Leasing's 84-plane portfolio.

Onex and BBAM, together with their partners, will buy additional Airbus jets flown by AirAsia, with options on 30 more A320neo planes due for delivery over the next few years.

BBAM manages a fleet of more than 400 jets for a variety of investment groups, and last year sold a 30% stake to GIC, Singapore's sovereign-wealth fund.

Asian banks and investors, especially in China, have filled the gap left by some European and U.S. banks which exited aircraft finance because of changing regulatory capital requirements over the past five years.

Write to Doug Cameron at doug.cameron@wsj.com

(END) Dow Jones Newswires

February 28, 2018 23:19 ET (04:19 GMT)

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