Investment Bank Macquarie Group is set to add significantly to its fleet of leased aircraft through the $US4 billion acquisition of 90 aircraft from AWAS Aviation Capital.
The addition of the planes from Dublin-based AWAS - one of the world's biggest aircraft leasing companies - will lift the number of aircraft in Macquarie's aircraft operating lease division to 220.
Macquarie's head of transportation finance, Stephen Cook, says the acquisition comprises high-quality assets.
"It complements our existing aircraft leasing portfolio and diversifies our client base," he said in a statement on Wednesday.
The acquisition also generates a consistent stream of earnings.
Aircraft leasing is considered an attractive sector given strong long-term growth in passenger numbers and air traffic.
Also, airlines have a combination of owned and leased aircraft. Leasing gives them flexibility in how they operate and fund their fleet - they don't need to by the planes outright.
The 90 aircraft from AWAS are leased to 40 airlines in 25 countries.
The acquisition will lift the number of airlines to which Macquarie leases aircraft to 94 in 49 countries.
The planes bought from AWAS are mostly narrow-body Airbus A320-200s and Boeing 737-800s, and wide-body Airbus 330s.
They have an average age of about two years, and an average remaining lease term of six-and-a-half years.
The 90 aircraft will become part of Macquarie AirFinance, the aircraft operating lease division of Macquarie's Corporate and Asset Finance Group.
Bell Potter head of research TS Lim said Macquarie had paid full value for the AWAS planes, but the deal would be earnings accretive.
Mr Lim said Macquarie had a good track record in aircraft leasing, the leases on the AWAS planes were long-term, and the planes only two years old.
"There shouldn't be any issues with the quality of the assets," he said.
Macquarie is seeking to raise $500 million through a share placement to institutional investors to help fund the acquisition.
A share purchase plan will also be offered to eligible shareholders.
Macquarie has placed its shares in a trading halt as it carries out the capital raising.
Meanwhile, Macquarie said that since its first-half earnings results were announced in October, trading conditions have continued to improve.
Combined earnings from its capital markets facing businesses - Macquarie Securities, Macquarie Capital, and Commodities and Financial Markets - have risen.
However, combined earnings from Macquarie's annuity-style businesses - Macquarie Asset Management, Corporate and Asset Finance, and Banking and Financial Services - have dropped.
The fall was largely because the previous corresponding period having been bolstered by the sale of OzForex and strong performance fees.
Share
