UPDATE: AIR SHOW: Irish Lessor Avolon Orders 12 Boeing 737-800s

20th Jul 2010 13:05

(Adds comment, detail) By Kaveri Niththyananthan Of DOW JONES NEWSWIRES FARNBOROUGH, England (Dow Jones)-Avolon, the start-up aircraft-leasing company, on Tuesday announced an order for 12 Boeing Co. (BA) 737-800s as rental companies continued to dominate deal-making at the Farnborough International Air Show. The debut order from the Ireland-based company is valued at $921 million based on list prices, and adds to a fleet of over 30 planes amassed through sale/leaseback deals and other transactions since Avolon was launched with private equity backing in May. The orders Monday and Tuesday signal an enthusiastic return for commercial players and start-up leasing companies following a difficult period due to concerns over liquidity . Paul Sheridan, head of risk advisory, EMEA, at Ascend, said: "This order, coupled with the orders from GECAS and Air Lease Corporation, show the increasing confidence in the aviation finance market." Air Lease Corporation Monday ordered 31 A320s and 20 A321 20s, while GECAS, a unit of General Electric Co. (GE) ordered 40 737-800s. Sheridan said that following the last downturn in the aviation market post 9/11, leasing companies didn't place large orders until 2005, realising they had left it late to order aircraft to take advantage of attractive prices. "For a lessor, having order positions in an improving market is an attractive place to be because they don't have to compete quite so hard for sale and leaseback deals with the airlines," Sheridan added. The U.K.'s largest regional airline, Flybe, Tuesday announced an order for up to 140 Embraer E-series aircraft E175. It has placed 35 firm orders valued at $1.3 billion at list prices, while options and purchase rights to buy further planes values the deal potentially at $5 billion. Flybe already operates Embraer's E195 aircraft and Bombardier Inc's (BBD.B.T) Q400. The order is great news for Embraer because the order book and number of deliveries for the E170 and E175 have fallen away over the past two years after many airlines went for larger E190 and E195. "Given that they will be facing a lot more competition as Sukhoi and Mitsubishi develop and deliver their regional jets, this order will help to remind people that their product is still a force to be reckoned with," Sheridan said. Avolon's order, which was previously booked by Boeing to unidentified customers, takes the list value of deals involving leasing companies at the U.K. air show to almost $13 billion. "Having our own delivery stream of new aircraft is a natural complement to our sale/leaseback and other financing capabilities," said Domhnal Slattery, Avolon's founder and chief executive. Slattery plans new orders for up to a third of a fleet expected to grow to as many as 150 planes over four years, focused on the Boeing 737 range, the Airbus A320 family and widebody aircraft such as the Airbus A330. "Already we have strong expressions of interest from our customers," Slattery said. "At a value of close to $1 billion, this order reflects both the scale of our ambition and the strength of our financial backing." He said a number of other deals are at an advanced stage. Slattery is a veteran of defunct Irish lessor GPA. He went on to sell his previous leasing start-up to Royal Bank of Scotland Group PLC (RBS.LN) before leaving to start an investment business. Avolon launched with $1.4 billion in funding, including $750 million in equity from Cinven, CVC Capital Partners and Oak Hill Capital Partners. -By Kaveri Niththyananthan, Dow Jones Newswires; 4420 7842 9299; [email protected] (MORE TO FOLLOW) Dow Jones Newswires July 20, 2010 08:05 ET (12:05 GMT)