Posted November 3, 2008 3:56 PM
By Lance Hooks
Lease is More?
The recent AFJ conference in Dubai provided a good gauge of the state of mind of the region’s aviation players – both those based there …and those along for the ride.
The latter group includes many of the seasoned finance players Ascend knows and loves, or at least quite likes. The finance panel was notable for its dominance by the international rather than locally based players, with Barclays, BNP, Citi, Natixis and Standard Chartered dominating proceedings, and Bahrain’s United International Bank the only ME based representation.
Negative sentiment prevailed – much the same as we’ve all been picking up here in Europe as well as Stateside. Standard Chartered made the point that there are now barely 15-20 banks active in aviation compared to 50-60 a year ago. However Natixis did make the point that the replacement for the Basel II rules on capital adequacy look to be ‘extremely favourable’ to the aircraft financing community, reducing capital reserves requirements by up to 60% in some cases.
The African panel did an admirable job in trying to persuade us that we are all missing out on a trick. Two luminaries within the audience (they know who they are !) pointed out the difficulties that still remain – not least the challenges of repossession.
Further encouraging signs emerged from Marwan Boodai, the ebullient CEO of Kuwait’s LCC Jazeera Airways – Kuwait's answer to Ryanair’s Michael O’Leary. One interesting fundamental he noted – and he may have a point…how many other regions in the world can offer the mix of business, leisure, migrant worker AND religious traffic that the GCC can ? Indeed Boodai’s presentation itself was verging on the evangelical. His star-turn at the close was to pull something of a surprise (yes, even Ascend hadn’t heard about it), as he announced the creation of Sahaab Aircraft Leasing – a new joint venture between the Jazeera shareholders, as well as NBK Capital of Kuwait, and DVB Bank.
With the best part of $400m in capital already raised, Sahaab expects to be starting up with a $2.5bn-$3bn fleet, ordering both narrowbodies and widebodies from Airbus and Boeing, and expects to be the region’s largest narrowbody lessor by 2012….eat your heart out DAE et al ? Boodai points to the great opportunity they now have to acquire assets, a solid financial base in the world’s fastest growth region, and (his numbers, but check out Ascend Online !) a 13.5% CAGR in operating leasing in the period since 1980.
Meanwhile back on planet earth, we know they’re not the only ones planning to set up leasing entities in the region…so as we fast approach 2009 – interesting times indeed.
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