Air Lease Corporation, a major player in aircraft leasing, is set to go private in a deal worth $7.4 billion. This acquisition is led by Japan’s Sumitomo and SMBC Aviation Capital, along with asset managers Apollo and Brookfield. Shareholders will receive $65 per share, which is nearly 8% higher than its previous closing price. Including debt, the total value of the deal reaches around $28.2 billion.
Leasing aircraft allows airlines to save money. Buying a plane can cost over $100 million, so renting makes financial sense, especially in recent years when airlines faced a shortage of available planes due to the COVID-19 pandemic and supply chain issues. This has driven up rental rates, hitting record highs.
According to IBA Group, the aircraft leasing industry now owns over half of the world’s passenger jets, increasing from 51% in 2009 to 58% today. However, as airlines become profitable, many are choosing to buy their own planes instead of leasing them.
“The cash flow for airlines is healthier now,” said Stuart Hatcher, chief economist at IBA. This shift means that airlines are reconsidering their capacity plans. Some even face tough times; for instance, Spirit Airlines recently filed for Chapter 11 bankruptcy for the second time in a year.
This acquisition emphasizes the trend of consolidation in the leasing industry, helping companies scale up. As of the last quarter, Air Lease had 495 aircraft in its fleet and is now the fifth-largest aircraft lessor globally.
Historically, the leasing market has changed significantly. In 2021, General Electric sold its aircraft leasing arm to AerCap, which is a leading lessor. Additionally, Standard Chartered sold its leasing business to AviLease, backed by Saudi Arabia’s sovereign wealth fund.
Steven Udvar-Házy, known as the “godfather of aviation leasing,” founded Air Lease in 2010 and emphasized providing modern, fuel-efficient aircraft to airlines worldwide. His impact on the industry is substantial; he co-founded ILFC, a major leasing firm, in 1973. After a long and successful career, he announced his retirement from Air Lease in March.
As more deals unfold, the landscape of the aircraft leasing business may continue to evolve, influencing the aviation sector as a whole. For more insights on aviation, check out trusted sources like CNBC’s aviation news for updates.
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