In a recent interview, Aircastle Limited (NYSE:AYR) CEO Ron Wainshal disclosed the company’s to add ten narrow-body jets to their fleet with a Japanese partner. The company is making this investment based on their belief that demand for travel in Asia will be surging in the near future.
Aircastle, a company based in Stamford, Connecticut, is in the business of acquiring, leasing and selling commercial jets to airline companies through their subsidiaries. Their fleet is made up of 162 aircraft leased to 53 entities in 34 countries. They are also in the business of investing in other aviation assets such as debt investments from commercial jet aircraft.
Aircastle owns 25% of Japanese venture, IBJ Leasing Co. According to Wainshal, their partner is entrusting them to find the best deals in this acquisition. The venture, an affiliate of Mizuho Financial Group Inc, started their partnership with Aircastle last February.
They are looking at expenses of around $400 million for the aircraft. The group will be purchasing the jets from airlines because these companies get discounts from the manufacturer’s list prices. Afterwards, Aircastle will then again be leasing out these aircrafts to the airline companies.
The travel industry in Asia has experienced a surge lately due to strong economic growth in the region for the few years. It is already on its way to beating the United States as the biggest plane-leasing market globally. This is expected to happen, given that the two most populous countries in the world, China and India, are in the region.
Aircastle is not the only one interested in Asia’s travel market. Billionaires such as Li Ka-shing and Tony Fernandes have also made their stakes in the region. In 2014, Cheung Kong Holdings, chaired by Li-Ka-shing, spent around $2 billion to purchase 45 airplanes. The same year, Tony Fernandes’ airline company, AirAsia, also entered the aircraft leasing market.
IBJ is not the only Japanese connection that Aircastle has made. They also have Marubeni Corp. on their side. This started when the Japanese company by becoming their biggest shareholder when they bought a stake in the group three years ago.