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AIRLINE FLEET

MANAGEMENT
INDEPENDENT ANALYSIS FOR OPERATORS OF, AND INVESTORS IN, AIRCRAFT & AIRLINES

IS THE ASIA-PACIFIC SPEARHEADING


AVIATIONS ECONOMIC RECOVERY?
PLUS:
INTERVIEW WITH JON SHARP, CEO OF ELFC
AFRICAS DILEMMA IN LIBERALISING ITS SKY
THE BENEFITS OF COVERED BONDS
THE DOCTRINE OF ENGINE ACCESSION EXPLAINED

January-February 2010 Issue: 65


AIRLINE FLEET C O N T E N T S
MANAGEMENT January February 2010 Issue 65

NEWS ROUND-UP
4 The latest news from the airline and aircraft finance industries.
EDITOR
Daniella Horwitz: Daniella.Horwitz@ubmaviation.com
FOCUS
Tel:+44 (0) 207 579 4847 14 Lessor Focus: ELFC
Having recently celebrated Engine Lease Finance Corporations (ELFCs) 20th year in
JOURNALISTS business, Jon Sharp, the company CEO, talks to Mary-Anne Baldwin about the
Mary-Anne Baldwin: Mary-Anne.Baldwin@ubmaviation.com
rewards and rigours of todays engine leasing market.
Tel: +44 (0) 207 579 4843
Sarah Morgan: Sarah.Morgan@ubmaviation.com
Tel: +44 (0) 207 579 4853 16 Africas dilemma in liberalising its sky
In 1988 African states arrived at a general consensus on the need to draft a new African
SPECIAL CORRESPONDENTS air transport policy to liberalise the African market. Unfortunately, this has never been
Africa: Kaleyesus Bekele realised. Our Africa correspondent, Kaleyesus Bekele, reports.
PRODUCTION
Kalven Davis: kalven.davis@ubmaviation.com
19 Deals News
Tel:+44 (0) 207 579 4851
Catch up on the last six months of deals news.

DISPLAY ADVERTISING TRADING, LEASING AND FINANCE


Simon Barker: simon.barker@ubmaviation.com
Alan Samuel: alan.samuel@ubmaviation.com
20 Who owns the engine?
Tel: +44 (0) 207 579 4845/46 While the Kingdom of the Netherlands has not adopted the Cape Town Convention,
Patrick Honnebier writes that the rulings of its Supreme Court indicate that this treaty
AIRLINE FLEET MANAGEMENT determines that aircraft engines can be financed separately in this jurisdiction.
(ISSN 1757-8833) Online: 1757-8841 (USPS 022-324)
is published bi-monthly by UBM Aviation Publications Ltd and distributed 28 The benefits of covered bonds in the aviation market
in the USA by SPP, 95 Aberdeen Road, Emigsville PA. Periodicals postage After government bonds, the European covered bond market is now the second biggest
paid at Emigsville, PA. POSTMASTER: send address changes to AIRLINE
bond market in Europe, worth an estimated 1.7tn. Rex Rosales and Simon Greer of
FLEET MANAGEMENT, c/o PO Box 437, Emigsville PA 17318.
Reed Smith seek to examine the benefits of covered bonds.
Subscription records are maintained at
UBM Aviation Publications Ltd. 1st Floor, Ludgate House, 245
Blackfriars Road, London, SE1 9UY, UK. 32 Warranty and guarantee considerations
The administration of warranties and guarantees is a complex matter which is often
UK annual subscription cost is 150. beyond the capabilities of smaller airline operators. Harish Shah of Aviation Warranty
Overseas annual subscription cost is 170 or $300 Solutions looks at some of the main considerations.

E-EDITOR & CIRCULATION MANAGER


Paul Canessa: paul.canessa@ubmaviation.com
AFM INTERVIEW
Tel: +44 (0) 207 579 4873 38 Leading light: Jet Airways
Jet Airways has taken advantage of Indias strong economic trajectory to become the
Website: www.ubmaviationnews.com leading domestic carrier. Daniella Horwitz spoke to Raja Segran, Jet Airways SVP
Europe and the UK, about how the airline has adapted to adversity and expects not
Printed in England by Wyndeham Grange Ltd.
only recovery, but increased demand in the next six months.
Airline Fleet Management is a licensed trademark of UBM Aviation
Publications Limited. All trademarks used under license from UBM Aviation
Publications Limited. MAINTENANCE OPERATIONS
1999 2010, UBM Aviation Publications Limited. All rights reserved. 42 Eastern promise Asia-Pacific comes of age
Asia-Pacific (APAC) was once dominated by established global passenger network
Airline Fleet Management, part of UBM Aviation, has used its best
carriers, but now a plethora of low-cost carriers and short-haul networks are providing
efforts in collecting and preparing material for inclusion in Airline Fleet
Management but can not and does not warrant that the information
stiff competition. The region is a burgeoning aviation hub in terms of jet-powered
contained in this product is complete or accurate and does not assume aircraft fleets, APAC is third behind the US and Europe. Daniella Horwitz looks at the
and hereby disclaims, liability to any person for any loss or damage caused growing fleet and its maintenance operations.
by errors or omissions in Airline Fleet Management whether such errors
or omissions result from negligence, accident or any other cause. CARGO & FREIGHT OPS
This publication may not be reproduced or copied in whole or in part by any
means without the express permission of UBM Aviation Publications limited.
50 Asia-Pacific air cargo outlook
Last year will be imprinted on our memories as one of the bleakest for freight operators.
Rows of surplus aircraft were parked in the desert as their owners P&Ls slumped into
the red. Yet Asia has been steadily boosting hopes and global cargo traffic figures.
Mary-Anne Baldwin examines the APAC market as we cross into 2010.

REGIONAL ECONOMICS
54 Bombardier bullish about the prospects for the CSeries
Bombardier Aerospace is looking ahead to an improving market and is confident about
UBM Aviation the future. Although reticent to overly champion the CSeries, confidence in the new
supports Orbis programme is clear. Sarah Morgan reports.

INDUSTRY DATA
58 Aircraft transactions and other data.
NEWS ROUND-UP The latest on deals, mergers, appointments and more

ATR posts record $1.4bn turnover NEWS HIGHLIGHTS BA crew to strike over Easter?
ATR said it achieved a new turnover record British Airways (BA) cabin crew are to
of $1.4bn, up from $1.3bn last year. The ballot over a possible Easter strike, it was
turboprop manufacturer delivered 54 announced on January 18. Some 13,000
aircraft last year, as well as taking orders members of the airlines union, Unite, will
for 40 and options for 17 new aircraft. The vote over the strike, which is to take place
year before (2008) saw ATR deliver 55 over the holiday. Unites previously
aircraft, take orders for 42 and options for planned walkout, which was to fall over
14 aircraft. Stephane Mayer, ATRs CEO Christmas and New Year, was deemed
said: Even if the current crisis has slightly illegal as staff which had taken
delayed some initial goals, we are ready to redundancy were part of the voting
continue our strong progression once the process.
economy will recover.
Vueling sees positive growth
IBA to sell Alitalias goods in 2009 figures
The International Bureau of Aviation The Spanish airline, Vueling said it
(IBA) has requested interest for the carried 8.2 million passengers during
purchase of Alitalias former aircraft 2009, with an average seat-load
inventory, the profits of which will go factor of 73.7 per cent, up 3.4 per-
to its creditors. Phil Seymour, IBA Japan Airlines files for bankruptcy centage points from last year.
president and COO, says the inventory Japan Airlines filed for bankruptcy on January 19. It was JPY2.3tn ($25.4bn) in debt Vuelings load factor was 68.8 per
covers: a wide range of parts from as of the end of September and is now seeking to revive itself under a state-backed cent during December, 69.8 per cent
individual lots of engines through to restructuring plan. On January 15 the struggling airline announced that it had for the 4Q and 73.7 per cent for the
high-value rotable parts and other secured a loan of JPY145bn ($1.6bn) from the state-backed Development Bank of year. Available seat kilometre (ASK)
more general aviation spares. This Japan (DBJ). The loan is part of DBJs credit line to JAL doubled to JPY200bn earlier was 1,102; 3116 and 10,181 respect-
includes, but is not limited to: CF6- this month. JAL had already used JPY55bn of the initial credit line provided in ively. The airline said that passenger
80C; JT8D-217; AE3007 and PW127 November 2009. The loan will help JAL maintain daily operations under restructuring volumes greatly increased during the
engines; a MD-11 simulator; A320; plans from the Enterprise Turnaround Initiative Corporation (ETIC). Meanwhile, it has year thanks to its merger with
767 and 777 rotables; and ATR72 been reported that JAL has defected from the Oneworld alliance and agreed to a tie- Clickair, and after the fall registered
propellers and landing gear. up with Delta Air Lines; however a JAL spokesperson would not confirm that a in 2008, as a consequence of the
decision had been made. Oneworld members had offered Japan Airlines (JAL) a companys fleet reduction plan.
ATA applauds CFTC on provisional revised package with $2bn in commercial benefits should the airline stay with the Vueling flew 8.19 million passengers
oil ruling group. American Airlines (AMR) British Airways (BA), Qantas and Cathay Pacific have in 2009, up from the 5.89 million it
The Air Transport Association of America agreed to enhanced relationships to be realised over three years. The package also flew in 2008.
(ATA) said it applauds the Commodity includes a pledge to offer JAL guidance from partners that have successfully
Futures Trading Commissions (CFTC) restructured their airline. Concerns over the airlines future have seen its stock crash, Maximus Air Cargo celebrates
decision to protect consumers and the losing more than 90 per cent of is value in the past week. On January 18 JAL shares growth
fragile economy from reckless oil were trading at a record low of $0.05. That leaves the market value of Asias biggest Maximus Air Cargo, the UAEs largest
speculation. The CFTCs proposed rule airline at just $150m, about the price of a new 787. dedicated cargo aircraft operator, which is
will establish the same oil-speculation ($1 = JPY90.79) celebrating its fifth year, has said that
position limits that currently apply to sales have increased nearly ten-fold to just
agricultural commodities and ensure that China seeks leading role in air cargo industry under $100m since its inception. Staff
legitimate hedge exemptions are not Air China is to receive a CNY1.5bn ($220m) capital injection after its parent, numbers have increased from 16 in 2004
exploited by banks. Unnecessary specu- China National Aviation Holding, was awarded the funds from the to 184 in 2009. Fathi Buhazza, CEO and
lation is adversely affecting the nations government. Air China is to use the capital to acquire a minority interest in president of Maximus Air Cargo, said:
economy and the airlines recovery. [This] its cargo unit, Air China Cargo, and to replenish its working capital. The Our plans for 2010 also include further
announcement takes an important step to airline is now in a good position to finalise an air cargo JV with Cathay Pacific inroads into the aircraft lease (ACMI)
drive excessive speculation out of the Airways, and the venture is on course to be operational by the stated target sector and provision of scheduled services
marketplace, said James May, ATA of June 30, 2010. Air China is hoping to take advantage of an anticipated together with ongoing support of worthy
president and CEO. improvement in the air cargo market this year, while the cash injection can humanitarian missions and initiatives such
be explained by the Chinese governments intention to encourage growth in as Care by Air.
the air cargo industry it has a stated aim of creating one of the worlds top
five cargo carriers by 2030. NAC enters into $100m
revolving credit agreement
HKIA sees recovery in 4Q figures with KIRK
Hong Kong International Airport says that improved performance in the 4Q of 2009 Nordic Aviation Capital (NAC), the
indicates that recovery is underway despite full-year contractions in passenger traffic, worlds largest turboprop lessor, has
cargo volume and aircraft movements of 46.1 million (-five per cent), 3.35 million entered into a $100m revolving
(-7.7 per cent) and 279,505 (-7.2 per cent) respectively. In the first three quarters of investment facility with Denmarks
2009, year-on-year cargo throughput was down by 22.9 per cent, 17.1 per cent and KIRK Aviation, a subsidiary of KIRK
5.9 per cent from Q1 to Q3, but a 16.2 per cent gain in 4Q helped narrow the Kapital. The deal, NACs second invest-
decline for the full year. On the passenger side, traffic in the 4Q decreased by just ment transaction with KIRK Aviation,
0.2 per cent compared to the same period in 2008, a noticeably smaller drop than builds on a strong relationship be-
the Q1-Q3 year-on-year declines of 7.1 per cent, 9.2 per cent and 3.5 per cent. tween the two organisations, first
Aircraft movements showed a similar trend, seeing drops of 6.7 per cent, 8.8 per realised in their joint investment of 39
cent and 8.2 pr cent over the first three quarters of the year but only a 5.1 per cent ATR72 aircraft leased to American
decline in the 4Q. Airlines in 2008.

Airline Fleet Management | 3


NEWS ROUND-UP The latest on deals, mergers, appointments and more

Pinnacle Airlines closes on $10m NEWS HIGHLIGHTS Bye-bye Blue Wings


credit facility with Independent Blue Wings, a Dusseldorf-based char-
Bank of Memphis ter airline, has ceased operations after
Pinnacle Airlines has closed on a $10m the German authorities revoked its
credit facility with Independent Bank of licence. It began operations in 2003
Memphis, Tennessee. The loan is designed and had a fleet of eight A320 aircraft.
to provide Pinnacle with additional It is believed that funding problems
working capital until it receives its 2009 led to the grounding of the carrier.
federal income tax refund, estimated to be
$38m. Separately, Pinnacle also modified AerSale raises $250m in equity
its $25m spare parts loan to reduce certain AerSale has completed an initial $250m
liquidity requirements. equity raise with Green Equity Investors,
an affiliate of Leonard Green & Partners.
US airlines expected to AerSale is a global provider of aftermarket
report 4Q losses aircraft, engines, and their component
US airlines are likely to offer more parts to airlines, leasing companies, and
evidence of recovering business travel OEM/MRO service providers. Nicolas
demand as the industry inches its way Finazzo, AerSales CEO said: This part-
out of the recession. Of the six-largest nership will allow us to channel all of our
US carriers, only Southwest Airlines energy into acquiring, leasing, and
is expected to post an operating redistributing our products to the aviation
profit. Relatively low fares are behind industry. Our business plan at AerSale
the expected 4Q performance, but calls for the acquisition of over $1bn of
analysts are hopeful that 2010 will be aviation assets during the next five years.
a year of recovery.
Airbus does rather well to achieve delivery record in 2009 SAS to off-load two
Airline capacity for January shows Airbus delivered a total of 498 aircraft in 2009, a three per cent increase on 2008 and A340-313s
positive growth, says OAG a company record for a single year. The figure includes 402 A320 family aircraft and Scandinavian Airlines System (SAS) is
Global airline capacity for January 2010 86 A330/A340s both records for a single year. Ten A380s were delivered. The to sell or lease two A340-313 aircraft
shows positive growth compared to company says it also reached its order intake target. Airbus received a total of 310 through Skyworks. The aircraft, (series
January 2009, reports OAG, a leading orders gross (271 net), valued at $34.9bn gross ($30.3bn net) at list prices. number 413 and 450) are powered by
aviation data business. This growth marks Considering the economic and financial environment we have done rather well in CFM56-5C4 engines and were built in
the fifth consecutive month in which 2009. Great teamwork and flexibility at Airbus and a close co-operation with 2001/2002 respectively. They are avail-
airline capacity has shown growth, with customers, suppliers and finance institutions were key to success, stated Tom able for delivery in 1Q 2Q.
294.6 million available seats this month, Enders, Airbus president and CEO. Despite all this positivity though, Enders remained
an increase of three per cent over January worried about the immediate future. We plan to keep production at 2008/2009 Brazils air travel on the up
2009. Global frequencies are up two per levels, but we need to remain prudent and flexible. We are not out of the woods Air travel in Brazil, the largest Latin
cent compared to January 2009, with a yet, he cautioned at the annual press conference of parent company EADS. The American aviation market, posted its
total of 2.37 million flights scheduled for group as a whole posted a 2009 revenue of 41.7bn, a drop-off of four per cent biggest increase in five years in 2009,
January 2010. Worldwide, frequency and from 2008. At the end of 2009, the manufacturer had a total order backlog of reflecting the countrys resilience to the
capacity in the low-cost sector are up by 3,488 aircraft, valued at $437.1bn the equivalent of six years of full production. worst downturn in global civil aviation in
10 per cent compared to a year ago. ($1 = 0.69) decades, the government said on January
13. Air travel, as measured by the number
Virgin cancels six A340s, Haitis poor infrastructure has cost lives of passengers transported per kilometer,
signs up for 10 A330s US and Haitian authorities imposed tight restrictions on aircraft bound for rose 17.7 per cent last year to 56.26
Virgin Atlantic has cancelled an order quake-stricken Haiti due to airport crowding and infrastructure difficulties. million from 47.81 million in 2008, the
for six A340-600s, but it has signed up Haitis airport had been forced to turn away relief flights sent to aid those Brasilia-based civil aviation regulator
for 10 A330s, the first twin-engine affected by the earthquake on January 12 due to its poor infrastructure. ANAC said in a statement. In 2005, air
aircraft ever flown by the carrier. The Reports suggest that over 10 aircraft were denied access to land at the Port- travel grew by 22 per cent.
airline plans revolutionary onboard au-Prince airport after its air space became dangerously over populated with
cabin innovations including USB ports aircraft trying to deliver supplies to the country. US President Barack Obama
and in-flight internet. Five of the said help had reached Haitis main airport in Port-au-Prince from the US, and
aircraft will arrive in 2011 and five in countries including Brazil, Mexico, Canada, France, Colombia, Russia, Japan,
2012. and Britain also sent aircraft with supplies and rescue personnel. The airport
has also been struggling to supply oil for return flights. Furthermore, many
US October flights fall 1.4 per cent of the packages aboard aircraft that have been able to land are now stranded
The number of US flights fell 1.4 per cent at the airport. Its surrounding roads have been split by the earthquake or
during October, according to the blocked by falling debris. Both Delta Air Lines and American Airlines have
Department of Transportations (DOT) cancelled flights to and from Haiti, at the time of going to print, both carriers
Bureau of Transportation Statistics (BTS). said they were unsure when flights to Haiti would resume.
The number of scheduled domestic and
international passengers fell 0.9 million to Baltia Air Lines signs engine lease deal with Logistic Air
58.8 million. The BTS reported that US Baltia Air Lines, the New York-based airline which is yet to operate, has signed a
airlines carried 1.3 per cent fewer power-by-the-hour engine lease agreement with Logistic Air. Russell Thal, Baltias EVP
domestic passengers than in October said the lease structure is the most economical way for a start-up carrier to operate
2008. International passenger traffic fell its aircraft and reduces its expenditures and risks. Baltia plans to start its operations
2.8 per cent. flying a New York- St. Petersburg route the only US airline to do so.

4| Airline Fleet Management


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NEWS ROUND-UP The latest on deals, mergers, appointments and more

Lufthansa passenger numbers NEWS HIGHLIGHTS Air France announces December


drop in 2009 traffic figures
Lufthansa flew fewer passengers in 2009 Air France KLM said that its December pass-
than in the previous year. In the period enger traffic fell 4.6 per cent; load factors
January through December, around 55.6 were up 0.8 percentage points to 79.7 per
million passengers opted for flights with cent and capacity was down 5.5 per cent.
Lufthansa, a decline of 2.6 per cent on the However, cargo load factors rose 8.4
year-earlier level. During the year, capacity percentage points to 70.1 per cent. Cargo
was scaled back by 1.3 per cent. Traffic fell traffic was down by 8.5 per cent while
by 2.4 per cent, while the load factor was capacity was reduced by 19.4 per cent. Air
down year-on-year by 0.9 percentage France said that in particular, the Asia
points to 77.7 per cent. Passenger numbers network recorded an improvement of 17.4
dropped in all traffic regions with the points in its load factor to 80.1 per cent.
exception of the Middle East and Africa.
E-Clear to confess monies
Tiger Airways launches IPO held for Flyglobespan
Low-cost carrier Tiger Airways has A High Court judge has ruled that E-
launched an initial public offering (IPO) Clear, the credit card processing com-
of its ordinary shares, following the Virgin America confirms its US citizenship pany, must disclose how much money
registration of its prospectus by the The US Department of Transportation (DOT) has ruled that Virgin America is a US it was holding on behalf of the
Monetary Authority of Singapore company, a fact queried by numerous rival airlines. At least 75 per cent of an airlines collapsed Scottish carrier, Flyglobe-
(MAS) on January 13. It is selling as voting stock must be owned by US citizens for an airline to be deemed American. span. E-Clear, which processed pay-
much as S$273m ($196m) of shares in Additionally at least two-thirds of its senior management must be US citizens including ments made by the airlines customers,
the largest IPO by an Asian carrier in its president. The San Francisco-based airline, which is owned by its UK-based parent is thought to be holding some 20m
five years. Tiger Airways is the first company Virgin Group, has been criticised by many rival US airlines for allegedly falsely for flights which had already flown
Singapore-based low-cost airline to trading and reaping the benefits of a US airline. However, Virgin America notified DOT and 15m for flights that were due
seek a listing on the main board of the itself after a significant potential shift in its shareholder makeup, the government after the airline went into admin-
Singapore Exchange. Tony Davis, Tiger body said. Under DOTs governance, Virgin America will employ one additional US istration. SkyEurope claims it is owed
Airways CEO, said he would use the citizen to its board of directors as part of it terms of agreement. It will also ensure that 13m by the company. It is also
IPO to help fund $4.8bn of new the company receives additional investment from the US rather than its UK parent. believed that Go Travel is seeking
aircraft. 300,000 from E-Clear. E-Clear has
ATA airline cost index shows 3Q decline refused to make known the amount it
The Air Transport Association of America (ATA), the industry trade holds for its clients. ($1 = 0.61)
organisation for the leading US airlines, has released its quarterly airline cost
index, incorporating data through the third quarter of 2009. The composite Garuda to restructure debt
cost index fell 36 per cent to 185.3 in the third quarter of 2009, versus 289.7 Garuda Indonesia received approval from
in the same period of 2008, easily outpacing the 1.6 per cent decline in the US noteholders to reorganise its international
consumer price index (CPI). The three largest components of the index and local currency debts on January 11,
which includes all operating expenses as well as interest expense were meaning the state-owned airline should
labour, fuel and transport-related expense, respectively. Combined labour soon be able to launch its long-delayed
and fuel costs accounted for nearly one-half of airline operating expenses. initial public offering. The agreement will
The average price paid for fuel, though still disproportionately high, fell from let the flag carrier proceed with buying
$3.51 to $1.94 per gallon, while the average cost (wages, benefits and payroll back $122 million of dollar-denominated
taxes) of a full-time equivalent worker rose 7.6 per cent to a high of $81,235. debt and RP146.4bn ($16m) of rupiah-
With heightened security measures in place, security costs looming, a fragile denominated bonds, Eddy Porwanto,
economic recovery and continued job losses reported by the Bureau of Labor Garudas EVP for finance, said.
Statistics airlines remain intensely focused on reducing expenses and
pursuing additional sources of revenue, said John Heimlich, ATA chief econo- Embraer exceeds 2009
mist. Cost discipline remains paramount amid historically weak demand for delivery forecast
air travel and the return to $80-plus crude oil. Embraer has exceeded its forecasted
deliveries this year by two units having
Ex-director of Jetstar arrested, CFO and COO blocked from handed over 244 aircraft. During the
Share price increase gives airlines leaving Vietnam 4Q Embraer delivered 23 E-Jets and
important cash source, says IATA At the time of going to press, Daniela Marsilli, Jetstar Pacific COO, and Tristan three ERJ 145s to the airline market as
Shares in the worlds airlines rose 25 per Freeman, CFO, were unable to leave Vietnam as authorities investigate trades that well as six Legacy 600 super midsize
cent last year, giving carriers an important resulted in a $31m loss for the airline in 2008/9. It has also been reported that Luong jets, 52 Phenom 100 entry level jets,
source of cash to help them towards Hoai Nam, the former general director of Jetstar, was taken into police custody on two Lineage 1000 ultra-large jets, and
economic recovery, the International Air January 7. Jetstar is a joint venture between a government-owned company and the first Phenom 300 light jet to the
Transport Association (IATA) said on Qantas. The Australian flag carrier is currently leading an investigation into fuel executive jet market. The companys
January 12. In its latest snapshot of the hedging which is thought to be responsible for the loss and is working very closely firm order backlog totaled $16.6bn at
industry, IATA said 2009 saw the biggest with the authorities. Alan Joyce, Qantas CEO, said the two Qantas employees had the close of 2009. During the 4Q it took
passenger and cargo demand drop in done nothing wrong and the carrier was absolutely not concerned other arms of orders from Oman Air for the sale of
history. It said that the rising ticket prices Jetstar could be affected. Jetstar Pacific is the Vietnam governments first foray into five E175s; NIKI Luftfahrt also confirm-
seen at the end of 2009 should continue airline privatisation and there are some concerns that this incident could prevent other ed purchased rights for two E190s. Air
this year and help the sector ramp up Australian businesses from investing in Vietnam in the future. I think it might deter Astana will operate two E190s via a
activity as the world economy regains some Australian businesses if this drags out and/or if it has a poor outcome, Peter leasing contract with Jetscape, it was
momentum. Jonker, Western Australia-Vietnam business council assistant president said. announced recently.

6| Airline Fleet Management


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NEWS ROUND-UP The latest on deals, mergers, appointments and more

South African Airlink to lease NEWS HIGHLIGHTS Auckland Airport to invest in NQA
four ERJ135s from ECC Auckland International Airport (Auckland
South African Airlink is to lease four Airport) has agreed to purchase a 24.55
pre-owned ERJ 135s from ECC Leasing, per cent interest in North Queens-land
the wholly-owned subsidiary of Airports (NQA). Jason Zibarras, NQA
Embraer. The aircraft, serial numbers chairman, said his board of directors looks
551, 620, 720 and 725, will operate out forward to working with Auckland Airport
of Johannesburg, South Africa, and and forging a new alliance to promote
will be deployed on regional routes. Cairns and Mackay. Auckland Airport will
The jets will also provide capacity to join fellow investors IIF Cairns Mackay
support the 2010 FIFA World Cup. The Investment (an entity advised by JP Morgan
ERJs, which will be configured to seat Asset Management), The Private Capital
37 passengers, will replace the airlines Groups The Infrastructure Fund, managed
existing turboprops. by Hastings, and Perron Investments.

PAL starts new 777-300 on Air Corsica takes A320-200


Manila-Tokyo Narita route from Iberia
Philippine Airlines (PAL) flew its newly BAA hit by bad weather yet cargo going strong Air Corsica has taken delivery of the
delivered 777-300ER on the first flight of BAA, the parent of six UK airports, has said it handled a total of eight million pass- first of two A320-200s, which were
its Manila-Tokyo Narita service on January engers during December, a 0.9 per cent drop compared to last years figures. Though originally intended for Iberia. The first
12. Accommodating 42 passengers in bad weather conditions caused an estimated 1.9 per cent, or 150,000, reduction in of the aircraft, powered by CFM-56-
business class and 328 economy, PALs passengers, BAA said that cargo tonnage across the airports was up a healthy 20 per 5B6/P engines, was delivered on Dec-
777-300ER was delivered two months cent on last year. During December Scottish airports were also impacted by the ember 3, the second will be delivered
ago. Tokyo Narita is the second liquidation of the Scottish airline Flyglobespan; Glasgows traffic was down 8.8 per in mid-January. Francois Gautier, CEO
destination served by the 777-300ER; the cent; Edinburgh was down 4.4 per cent and Aberdeen down 9.4 per cent on last year. of Avinco, which managed the trans-
jet has been flying the Hong Kong route Southamptons passenger figures declined 5.9 per cent in December and Stansted was action said: the outcome of this trans-
since November 26, 2009 and will be down 2.6 per cent its best performance since March 2008, BAA said. On an annual action benefits all parties involved.
deployed on the Sydney and Melbourne basis, passenger traffic at Heathrow was down 1.5 per cent to 65.9 million; Stansted
services by mid-March. dropped 10.7 per cent to 20 million; Southampton Airport slid 8.2 per cent to 1.8 Emirates passenger charged with
million; Glasgow was down 11.3 per cent to 7.2 million and Aberdeen down 9.4 per bomb hoax
HKAC completes acquisition cent to three million. Edinburgh Airports traffic rose 0.6 per cent to nine million. An Emirates passenger has been charged
of Allco Aviation by British police for making a hoax bomb
Hong Kong Aviation Company (HKAC) Boeing orders slip in 2009 threat onboard an aircraft due to fly from
has successfully completed the previ- Boeings gross orders fell 61 per cent to 263 aircraft last year, affected by the Heathrow to Dubai on January 8. Robert
ously announced acquisition of the recession and the slump in air travel and freight transport. The second-largest George Fowles made verbal threats during
Allco Aviation business and assets from airframer reported a net 142 commercial aircraft orders in 2009 after taxiing, after which police boarded the
the Receiver of the Sydney, Australia- cancellations. Boeing said the global recession presided as an oppressive aircraft and arrested three men. Alexander
based Allco Finance Group. The Allco market reality in 2009, driving many carriers to re-evaluate their near- and Bain McGinn, another passenger aboard
Finance Group went into receivership medium-term fleet requirements. Boeing said it delivered 481 commercial the flight, was charged with being drunk.
in November 2008. Financial terms of aircraft in 2009, up 28 per cent from 375 in 2008. This matches the companys The third was later released without
the transaction have not been disclos- forecast of 480-485 aircraft for 2009. The commercial aircraft backlog remains charges. The incident follows an attem-
ed. HKAC now owns interests in and at 3,375 units. The company registered 263 gross and 142 net commercial pted terrorist attack on an aircraft bound
will manage all relevant aircraft within orders for the year as air travel and freight declined and carriers worldwide for Detroit on Christmas day.
the former Allco aviation portfolio. experienced severe economic challenges. The 737 remained popular as the
industry workhorse with 372 deliveries. The aircraft also topped Boeings Skytanking acquires aviation
ExpressJet announces operational order book with 197 gross orders. The 777 led Boeings twin-aisle programmes fuelling service in Italy
changes with 30 gross orders. Jim Albaugh, Boeing commercial airplanes president and Skytanking, a subsidiary of Marquard
ExpressJet Airlines released its December CEO, said: 2009 was not without its challenges but it also was a year of & Bahls, an independent petroleum
figures in which it said revenue passenger exciting achievements for our company and our industry... With signs of company, has purchased a 66.6 per cent
miles (RPM) totaled 692 million and economic recovery emerging in 2010, we look forward to better days ahead. stake in two aviation fuelling service
available seat miles (ASM) flown were 873 companies, HUB and PAR. The company
million. During the month it transitioned AAPA argues against speedy security modernisation provides refuelling services at 21 air-
four aircraft from its Continental Express The Association of Asia Pacific Airlines (AAPA) has cautioned governments not to make ports across Europe, this is its first such
fleet in preparation for its agreement with knee-jerk reactions by increasing security measures too soon. It takes real political acquisition within Italy. The shares
United Airlines commencing May 2010; a maturity to remain calm. Additional security measures are only justified when it can were previously owned by ENI, Esso
further four will be transitioned from be demonstrated that the benefits outweigh the additional burdens they impose on Italiana and Kuwait Petroleum, each of
Continental Express to be sub-leased by society, said the body in a statement. AAPA argued that screening technologies such which sold 33.3 per cent to Skytanking.
ExpressJet. It will then operate 22 ERJ-145 as full body scanners and automatic explosive detection systems havent sufficient Legal practitioners Norton Rose advis-
aircraft under the United Express brand. proof of effectiveness or safety. Additionally, it argued that as 99.99 per cent of ed ENI on the sale of its shares.
ExpressJet expects its 2010 fleet to equal passengers are entirely innocent, such methods raise issues of fairness and
244, including: 206 aircraft flying as preservation of human dignity. Andrew Herdman, director general of AAPA, said: Air Austral orders two 737-800s
Continental Express; 22 aircraft flying as Good security is all about comprehensive threat assessment and balanced risk Reunion-based Air Austral has announced
United Express, increasing to 32 aircraft management, not the elimination of every conceivable risk. Urging harmonisation of an order for two 737-800s. The order is
from May to October 2010; and 16 aircraft security measures, he added: The sudden introduction by national governments of valued at $152 m at list prices. The two
operating within the charter division, uncoordinated new security requirements, without prior consultation, makes practical 737-800s will be the airlines first of this
decreasing to six aircraft from May to implementation difficult. The fact that such requirements are unpublished, and even in model, replacing one 737-300 and one
October 2010. some cases unwritten, inevitably leads to inconsistency of application. 737-500 in the airlines fleet.

8| Airline Fleet Management


     
 

    
When air ambulance service Aero-Dienst found
itself grounded in Gander, the situation was more
than frustrating. It was life threatening. Their
engine issue would prove to be minor, but with no
qualied mechanics or parts the medical team was
facing a critical delay. Desperate, they contacted
Pratt & Whitney Canadas Eagle Service Plan team.
Within hours, despite a major snowstorm, a fully
equipped Mobile Repair Team and the required
parts were dispatched by charter aircraft, and the
ying doctors were soon ying again. Lives depend
on Aero-Diensts air ambulance rescue missions.
Thats why Aero-Dienst depends on P&WC.


NEWS ROUND-UP The latest on deals, mergers, appointments and more

Wings Air takes first of 30 WestJet December load factor


ATR 72-500s NEWS HIGHLIGHTS sets record
Wings Air, a regional subsidiary of Canadian low-cost carrier WestJet Airlines
Indonesias private carrier Lion Air, has reported a record load factor on January
acquired an ATR 72-500 following its 787 finally takes to the skies after two-year delay 6, 2010, saying it flew fuller aircraft in
contract signing last year for 15 of The 787 prototype, ZA001, took December as it improved call centre
the aircraft type plus options for an off for its first flight from Paine service. In the busy month of December,
additional 15. The deal was worth a Field in Everett, north of Seattle, WestJet said its load factor rose to 81.7
collective $600m. The airline will em- Washington, at 10.27am local per cent from 80.9 per cent in the same
ploy the aircraft on feeder routes to time (18.27 UTC) on December period last year. Traffic, measured by
main hubs as well as open new routes 15. After approximately three revenue passenger miles (RPM), increased
to remote areas. The ATRs, the re- hours, it landed at 13.33 (21.33 8.1 per cent year-over-year, and capacity, or
mainder of which will be delivered UTC) at Boeing Field, just south of available seat miles, rose by seven per cent.
through to 2011, will also replace Seattles city centre, from where
existing MD-80s and increase the the flight test programme will be JAL expands codeshare with
routes currently flown by Lion Airs conducted. The flight crew took Vietnam Airlines
737-900ERs. Rusdi Kirana, chairman of the aircraft to an altitude of Japan Airlines (JAL) further expand-
Wings Air and CEO of Lion Air, said: 15,000ft (4,572 metres) and an ed its codeshare agreement with
Our new fleet of ATRs will also enable air speed of 180kts, approx- Vietnam Airlines (VN) and started
us to optimise our operating costs on imately 207mph (333kmph), to offering the Osaka (Kansai) Hanoi
the regional network, and therefore test some of the systems and route operated by VN as of January
we will be able to propose very structures. After a programme 13, 2010. As announced in November
competitive fares to our passengers. delay of more than two years, last year, Japan Airlines will suspend
The aircraft are configured with 72 Boeing will use six aircraft for the its existing once-daily flight bet-
seats and powered by Pratt & Whitney flight test programme and fly ween Osaka (Kansai) and Hanoi from
127M engines. them nearly around the clock to January 11, 2010. Through the new
meet the target for the first delivery to Japans All Nippon Airways (ANA) in the fourth codeshare arrangement, JAL will
quarter of 2010. The aircraft was originally scheduled to take off for its first flight in maintain a network of seven routes
Skywest to lease A320-200
September 2007 with deliveries starting in May 2008. Production issues at some of with 33 weekly round-trip flights to
from Avation
the companys global partners, the machinists strike in 2008, and the design change Vietnam.
Skywest, the Australian and South East
of the wing-to-body joint were major contributors for the delays.
Asia regional airline, is to take an add-
itional A320-200 on lease from Avation
in order to expand its charter oper- Ryanair turns away from Aer Lingus bid
ations for the mining industry, with the Ryanair says a new bid for Irish rival Aer Lingus is not on the cards. Michael
possibility of adding new routes and OLeary, Ryanair CEO, said at an investor briefing: A third bid is highly
hope of winning additional contracts. unlikely unless or until the Irish government decides to dispose of its 25 per
The aircraft is currently being operated cent stake in this loss-making, increasingly marginalised, regional carrier.
in the UK under another unnamed Ryanair also confirmed that it will cut capital spending by more than 90 per
leasing company. Skywests operating cent following the unsuccessful termination of talks to buy 200 aircraft from
statistics for December 2009 showed Boeing. The airline now plans to return cash to shareholders, beginning in
load factors increased four per cent to 2013. Planned capital expenditure will now decline from 1.2bn in the
52.2 per cent; traffic as measured in current year to as little as 100m p.a. in fiscal year ending March 2013,
revenue passenger kilometers (RPK) rose commented OLeary. We expect our current cash reserves of 2.5bn to grow
14.4 per cent and capacity measured in substantially by March 2013 and we plan to distribute surplus cash to
available seat kilometers (ASK) increased shareholders from that date. Ryanairs December passenger traffic
5.5 per cent. increased 12 per cent from the same time last year to 4.9 million, bringing
the total figure for 2009 to 65.3 million. The load factor was 81 per cent in
December, up two points from December 2008. The airline also announced
US fighter jets escort BA workers bin wine
that it has hedged more than 50 per cent of its fuel for the year ending
Hawaiian flight but not whine
March 2011 at approximately $720 per tonne. ($1 = 0.70)
A rowdy passenger aboard a Hawaii- Despite having just been elected to chair
bound airliner prompted the pilot to the Association of European Airlines
return the aircraft to Portland, Oregon, BAA wins appeal against sale of UK airports (AEA), closer to home Willie Walsh, CEO of
escorted by two military fighter jets Airport operator BAA has won an appeal against the Competition Commission ruling British Airways (BA), is plagued with the
on January 6, 2010. The Hawaiian that it must sell three of the seven UK airports, including Stansted and Gatwick, within continued threat of strike and with what
Airlines jet en route to Mauis Kahului two years. The Competition Appeal Tribunal (CAT) concluded with the greatest reluct- a number of media reports have called
Airport turned back because of a ance that a claim by BAA of apparent bias was justified. Debt-plagued BAA, which passive resistance. Having had their
suspicious passenger who made is owned by Spanish infrastructure firm Ferrovial, claimed there was a conflict of interest Christmas walk-out quashed by law, BAs
threatening remarks and refused to because Peter Moizer was one of the Competition Commissions panel members, but workers are reportedly finding new ways
store his carry-on bag, said Suzanne was also an adviser to the Greater Manchester Pension Fund, which was backing a to protest against the airlines management
Trevino, a spokeswoman for the US proposed bid for Gatwick by the Manchester Airports Group. He eventually resigned by emptying only partially drunk bottles
Transportation Security Administra- from the investigation, but the CAT ruled he did not do so early enough. Readers will of wine reserved for first class passengers
tion. The aircraft, escorted by be aware that the airport operator already sold Gatwick, the capitals second busiest and throwing away wash kits which are
two F-15 fighters, landed in Portland airport, to Global Infrastructure Partners for a smaller than expected 1.5bn in October. usually recycled. The workers union, Unite,
without further incident, and the man, This was partly because of the original Commission ruling and partly to pay off some of plans to reopen its strike ballot on January
who was not identified, was detained its debts. The operator may still choose to sell Stansted, Glasgow or Edinburgh, but the 22 for a strike planned to coincide with the
for questioning, authorities said. ruling gives it time to find bidders willing to pay higher prices. ($1 = 0.61) Easter holiday.

10| Airline Fleet Management


NEWS ROUND-UP The latest on deals, mergers, appointments and more

AAM signs up for two E190s


Germanys Aircraft Asset Management
NEWS HIGHLIGHTS
(AAM) has signed a firm order for two
Embraer E190 jets. The deal is valued at
$79m at list price, and is already Air transport records worst ever performance in 2009,
included in Embraers firm order says ICAO
backlog for the third quarter of 2009 as Scheduled passenger traffic on airlines of member states of the International
undisclosed. The first aircraft was Civil Aviation Organisation (ICAO) declined some 3.1 per cent overall in 2009
delivered to the operator, Augsburg compared to 2008, according to preliminary figures released by the
Airways, last September, and the Organisation on December 21. The decline is the largest on record for the
second is expected to join the airlines industry and reflects the one per cent drop in the world gross domestic
fleet in 2010. product for the year, the first negative growth of the global economy since
the Great Depression of 1929. In 2001, passenger traffic fell by 2.9 per cent,
OAG reports global airline capacity mainly due to the events of terrorist attacks in the US on September 11. In
up four per cent 2009 international traffic fell by about 3.9 per cent while domestic traffic
Global airline capacity for December 2009 fell by 1.8 per cent. Total (international and domestic) traffic declined in all
showed positive growth compared to regions except for the Middle East, where carriers posted a strong 10 per
December 2008, reports OAG, a leading cent growth. The double-digit domestic passenger traffic growth in the
aviation data business. There were 294.8 emerging markets of Asia and Latin America, and the relative strong
million seats available, a rise of four cent performance of low-cost carriers (LCCs) in North America, Europe and Asia UK law passed on laser crime
over December 2008 levels. Global Pacific, helped curtail the severity of the decline in total traffic. Capacity A new UK law criminalising the act of
frequencies are up one per cent compared offered by airlines, expressed in available seat kilometres (ASKs), declined by shinning a light or laser at an aircraft has
to December 2008, with a total of 2.4 3.1 per cent, in response to the declining traffic. In line with the improving been passed. The law, which was initiated
million flights scheduled for December economic situation in many parts of the world, a moderate recovery is by the Civil Aviation Authority (CAA), was
2009, despite an average North American expected for 2010 with a 3.3 per cent traffic growth forecast. The in response to an increasing number of
frequency decline of two per cent. momentum is expected to continue in 2011, hopefully on the way to full incidents. The CAA said in a statement
Worldwide, frequencies and capacity in the recovery and traditional growth trends of 5.5 per cent per year. that the numbers of reported incidents
low-cost sector are both up by 10 per cent of this type have increased 25 times in
compared to a year ago, accounting for ANA orders 10 Boeing aircraft in $2bn deal only two years. In 2009 there were a total
444,539 flights (18 per cent) and 65.6 Japans All Nippon Airways (ANA) announced an order for 10 Boeing aircraft worth a total of 737 attacks with lasers on commercial
million seats (22 per cent). of about $2bn at list prices on December 21, surely a welcome Christmas present to the airliners, air ambulances and police
US airframer. ANA said it would buy five 777-200ER aircraft and five 767-300ER aircraft, helicopters across the UK.
for a total of 185.2bn ($1.95bn) excluding any discounts the Japanese carrier may have
Qantas takes delivery of fifth
negotiated. ANA, Japans second-largest carrier, was the launch customer for Boeings
A380 GOL secures credit line
787 Dreamliner, which finally flew for the first time on December 21, 2009, after a series
Qantas has taken delivery of its fifth GOL Linhas Aereas Inteligentes, the
of delays.
and sixth new A380 aircraft. Alan largest low-cost and low-fare airline
Joyce, Qantas CEO, said the arrival of in Latin America, has secured a $150m
the airlines fifth A380 in December, Embraer secures $2.2bn investment from China credit line, to finance aircraft acquis-
and sixth aircraft in the New Year, Embraer has secured a $2.2bn deal with CDB Leasing (CLC) to cover aircraft ition prepayments. This concludes the
would allow it to launch the new A380 financing over a three-year period. The deal, which is supported by the financing of such payments until the
route. Qantas inaugural A380 service China Development Bank, parent of CLC, will help fund aircraft purchases end of 2010, in accordance with the
in October 2008 was between within China. CLC is Chinas largest leasing company by capital and total companys plan to renew its fleet,
Melbourne and Los Angeles, Joyce assets. Embraers shares rose 10.3 per cent on the news which was released which will consist exclusively of 737-
said. With the arrival of two new on December 11. 700s and -800s. The credit line was
aircraft, growing our A380 fleet to six, taken out with Natixis Transport
we are pleased to be able to offer Finance, at the Libor +2.45 per cent
customers a second route option out of per year and amortisations (principal
Melbourne to London via Singapore. plus interest) will coincide with the
2010 aircraft delivery schedule.

Frontier Airlines adds eight new


routes through codeshare with LAN to buy 30 A320s
Midwest Chiles flagship airline LAN said December
Frontier Airlines has announced further 23, 2009 it has signed a contract to buy
expansion of its codeshare partnership 30 Airbus A320 short-haul aircraft worth
with Milwaukee-based Midwest Airlines. around $1.97bn. The new aircraft will
Effective from February 16, 2010, Frontier be incorporated into its fleet between
is able to sell tickets to eight Midwest 2011 and 2016. This investment ensures
destinations out of Kansas City Inter- the future growth of the company and
national Airport (MCI) under the Frontier reaffirms our commitment to the develop-
code. In addition, Midwest is now able to ment of commercial aviation in Latin
sell tickets under the Midwest code for America as well as to the socio-economic
Frontiers non-stop flights to Denver growth of countries in the region, said
International Airport (DEN) from MCI. Ignacio Cueto, LANs president and COO.
Customers can also book connecting LAN said it would also sell five A318s
codeshare itineraries through Milwaukee, during 2011 as part of its fleet upgrade
Denver and Kansas City. programme.

Airline Fleet Management | 11


NEWS ROUND-UP The latest on deals, mergers, appointments and more

Heico reports fourth quarter IATA forecasts greater loss of


results PEOPLE IN THE NEWS $5.6bn in 2010
HEICO Corporation reported net income of The International Air Transport
$11,636,000 for the fourth quarter of fiscal Association (IATA) has revised its
2009, compared to $13,650,000 for the NGC appoints Sir Nigel Essenhigh as financial outlook for 2010 to an
fourth quarter of fiscal 2008 and up from CEO Europe expected $5.6bn global net loss, a
$11,132,000 in the third quarter of fiscal Northrop Grumman Corporation (NGC) has appointed substantial increase from the pre-
2009. For the fiscal year ended October 31, Sir Nigel Essenhigh as CEO of its information systems viously forecast loss of $3.8bn. For
2009, net income was $44,626,000 Europe business. In this new position, he will focus on 2009, IATA maintained its forecast
compared to the $48,511,000 reported for the strategic direction of Northrop Grummans activities of a $11bn net loss. The worlds
the fiscal year ended October 31, 2008. in the defence and civil IT, C4ISTAR and counter-IED airlines will lose $11bn in 2009. We
Operating income totaled $24,061,000 in markets in the UK, mainland Europe and its export are ending an Annus Horribilis that
the fourth quarter of fiscal 2009, com- markets. Sir Nigel will continue in his role as non- brings to a close the 10 challenging
pared to $28,710,000 in the fourth quarter executive chairman for Northrop Grumman in the UK. years of an aviation Decennis
of fiscal 2008 and up from $21,422,000 in Horribilis. Between 2000 and 2009,
the third quarter of fiscal 2009. For the Gardiner to head Goodrich actuation systems airlines lost $49.1bn, which is an
fiscal year ended October 31, 2009, Goodrich Corporation has appointed Mike Gardiner as president of its average of $5bn per year, said
operating income was $88,255,000 actuation systems business unit. Gardiner, formerly CEO of the companys Giovanni Bisignani, IATAs director
compared to $105,788,000 for the fiscal aero engine controls joint venture with Rolls-Royce, will report to Jack general and CEO.
year ended October 31, 2008. Carmola, segment president, actuation and landing systems.
Delta forecasts $1.1bn net loss
TAM to buy Pantanal Greenwich Aero appoints senior executive Delta Air Lines has forecast a $1.1bn net
Brazilian airline TAM has said it will Bob Fitzpatrick has been appointed SVP government and military business of loss for 2009, due to losses in its fuel
pay BRR13m($7.3m) to buy control of Greenwich AeroGroup and president Summit Aviation, effective February 1, 2010. hedges, but said revenue trends in the
smaller rival Pantanal, gobbling up In this new role, Fitzpatrick will be responsible for coordinating all of Greenwich fourth quarter suggested a better 2010.
another share of the fast-growing AeroGroups government and military business. In addition, he will be responsible There is a fairly significant fuel hedge loss
regional aviation market and securing for the day-to-day operations of Summit Aviation, a fixed and rotor wing aircraft embedded in those numbers, said Delta
more slots in one of the countrys maintenance, repair and modification service provider. president Ed Bastian, explaining that the
busiest airports. As part of the deal, losses were incurred earlier in 2009. But
Brazils largest airline will also assume Stinnett named director of materials for CIRCOR the worlds largest airline said 4Q trends
about BRR70m of debt owed by Don Stinnett has been named director of materials for CIRCOR Aerospace. were showing an improvement from early
Pantanal. The transaction still requires In this new role, he will report directly to Andrew Brandenburg, GM for 2009 - ticket sales to corporate clients rose
regulatory approval from the civil the Southern California campus. Stinnett will be a hands-on materials almost 15 per cent over the last month.
aviation authority and anti-trust leader and responsible for planning and controlling all necessary efforts to
authorities. maintain focus upon reducing material cost and inventory, improving on- Jetscape places E190LR on
time delivery and implementing a more sophisticated materials system. lease with AeroMexico
US carriers challenge Jetscape has taken delivery of a new
emissions cap Champion nominated as Airbus head of engineering E190LR aircraft (MSN 19000248) from
Some major US airlines have mounted a Airbus has appointed Charles Champion to succeed Patrick Gavin, who is retiring, Embraers delivery center in Sao Jose
legal challenge to European Union as head of engineering, effective April 1. Champion is currently EVP customer dos Campos, Brazil and placed it on
regulations that would cap allowable jet services, a position he has held since April 2007. He was head of the A380 an eight-year operating lease to Aero-
emissions and force carriers exceeding programme from 2001 until 2006. Champion began his professional career with Mexico, Mexico City, for use by its
those limits to pay up. The Air Transport Aerospatiale as an aerodynamic engineer in 1980. subsidiary, AeroMexico Connect. This
Association (ATA), United Airlines and is the third E190LR aircraft leased to
Continental Airlines, have filed suit in New commercial director for Swissport Cargo Germany AeroMexico from Jetscape. Financing
London. The British government is the first Swissport International has appointed Ricky Saghir commercial director of for the aircraft was provided by
to start implementing early stages of the its German cargo organisation, effective February 1. He will also be in the Brazilian National Development
EU scheme, which goes into effect in 2012. charge of the companys commercial cargo activities in Eastern Europe. Bank (BNDES) as part of a recently
It would impose caps on carbon emissions Saghir joins the Swiss ground services provider from Lufthansa Cargo, completed commitment by BNDES to
and require carriers that exceed limits to where he headed the team for the worldwide purchase of handling services. provide Jetscape financing for up to
purchase credits. 10 Embraer E-Jets.
OToole named CMO of United Airlines
$500m aircraft leasing UAL Corporation, parent company of United Airlines, has named Thomas OToole BA pension fund hits 3.7bn
partnership takes off SVP, CMO. In his new role, OToole will be responsible for developing and deficit
Sky Holding Company and Oaktree implementing the companys marketing, e-commerce, contact centre and The British Airways (BA) pension deficit
Capital Management have joined merchandising strategies. With almost 30 years of marketing experience 20 in has shot up to 3.7bn, as its staff
forces to provide capital to airlines. The the hotel industry OToole was most recently CMO and CIO for Global Hyatt prepared to strike over Christmas. (That is
new $500m investment from funds Corporation where he led brand marketing, distribution, reservations and a 1bn deficit for the Airways Pension
managed by Oaktree will enable Sky to information technology for all operating companies and brands worldwide. Scheme, and 2.7bn for New Airways
finance over $2bn of Boeing and Airbus Pension Scheme). In a statement BA said:
aircraft annually, with sale/ leaseback Inamori to become JAL chief executive The airline and trustees will now work
activities set to begin in the first Japans prime minister, Yukio Hatoyama, has asked the entrepreneur Kazuo together to develop a recovery plan, a
quarter of 2010. Sky is a full-service Inamori to take over the chief executive post of Japan Airlines (JAL) when process which will involve the company
aircraft leasing company based in San Haruka Nishimatsu, the current CEO, steps down. Inamori, 77, is the founder consulting with employees and their
Francisco with offices in Seattle, Miami of the electronics giant Kyocera. Nishimatsu is expected to step down when trade unions. BA posted a pre-tax loss
and Buenos Aires, and a European JAL files for bankruptcy protection. of 401m last year and is on course to
office opening in 2010. lose around 600m this year. ($1 = 0.62)

12| Airline Fleet Management


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FOCUS Interview Jon Sharp, CEO ELFC

Having recently celebrated Engine Lease Finance Corporations (ELFC) 20th year in business, Jon Sharp, the
companys CEO, talks to Mary-Anne Baldwin about the rewards and rigours of todays engine leasing market.

LESSOR FOCUS:
ELFC
FOR OVER TWO DECADES, ELFC HAS CARVED ITS NAME AS A
leader in spare engine financing and leasing. From its
headquarters in Shannon, Ireland, the company manages some
200 engines which are leased across a global network. Theres
been a massive growth in engine leasing over the 20 years weve
been in business, says Jon Sharp, CEO of ELFC. Leasing of spare
engines alone has seen distinct growth over the years; without a
universal register it is hard to quantify the number of spare
engines on the market, but Sharp estimates that for every 100
engines currently installed there will be around 13 to 14 spares in
existence. Of these spares he believes that 20 to 25 per cent are
owned by leasing companies. When we started this business I Jon Sharp, CEO ELFC
would say that perhaps 20 per cent of aircraft were leased and
probably five per cent of engines. Today my estimate is that According to Sharp, the surplus is now starting to be absorbed
something like 40 per cent of new spare engine deliveries are and the supply-demand imbalance is finding its equilibrium. Like
through leasing companies. many he is expecting to see tentative market growth and a return
to normalcy in 2010. The stock of new engines coming off of
According to Sharp the reason for this market growth is that the production line is now beginning to equalise with demand
specified and outright purchasing of engines is becoming less and regarding the older engines types, aircraft are gradually
frequent: all airlines desire to operate with a minimum amount being put back into service. You get the effect of: Ah, weve got
of overhead and that means a minimum amount of spare this 737 parked in Arizona and we want to put it back into
engines. As such airlines are more inclined to lease engines on a service, but unfortunately we cant because weve taken both the
need-to-use basis than to purchase a large stock which may later engines off. So now theres a rush to put engines through shops
sit unused. While OEMs will insist airlines with medium-to large- and MRO demand almost doubles.
aircraft orders provision enough spare engines, the increasing
preference is to lease, imparts Sharp. Riding the wave
Sharp says that many leasing companies have recently suffered
Demand versus supply due to the order on the up-turn, panic on the down-turn
During the financial downturn short-term lessors have been less approach but ELFC has ridden the wave and used its peaks and
able to lease engines into what is an already drenched market. troughs as an advantage, purchasing engines as they crash in
Manufacturers were crowing about huge volumes of orders in value and selling them when they rise. Weve had our greatest
2006 and then they beat it in 2007. The [best] two record years years for purchasing engines, greatly outnumbering the amount
ever. But these orders were to be delivered during 2008 and we have sold... I dont understand why a lot of people dont do
2009 when financing was harder to find and demand was at a this because its not rocket science. You look at the economic
dribble. As the downturn gained momentum airlines cut their indicators and you figure out where you are. I said; boys, were
capacity by parking and selling aircraft. The remaining dregs of at the top of the market, well start selling large quantities of
demand were generally quelled not by new deals but by stripping stuff and thats what we did. And when the prices start to
down aircraft that had been parked in the desert. All you had to tumble, you start buying up the engines again.
do was pull an engine off the wing of an aircraft carcass and
youd save the cost of a shop visit. Short-term lessors were Manufacturers engine prices have stayed relatively flat; engine
sitting with warehouses full of engines says Sharp, but the prices are linked to an inflation index which accounts for the
poor guys in the repair shops have had empty receiving bays. increase in the cost of parts and labour. Engines typically go up
four to 4.5 per cent per annum by application of this index
Demand fell off at a time when supply of new engines was although with the recession the index has probably caused the
peaking, says Sharp. But the avalanche of new engines would price of engines to remain flat for a year or so. However, while
not be stemmed. What the manufacturers cannot do is simply prices have remained stable there are better deals to be had. On
turn off the tap and stop production, theyve spent most of the the upturn, engine manufacturers were forcing lessors to
money on the components and the final part of bolting the purchase engines at a premium and at higher (i.e. more
engines together is really a low-cost operation, at the top end of expensive) thrust ratings, now they are offering engines at
the s-curve. So they continued to make their engines and the various thrusts at more affordable prices though with a
airlines didnt want them, which certainly caused a surplus. saturated market not many lessors are making use of the offer.

14| Airline Fleet Management


Regarding residual values for specific engine types, Sharp agrees The company trades predominantly in long-term leases, a result,
with the consensus that the JT8D on the MD-80 has been says Sharp of competitive funding costs. We used to lease
finished off by this recession any demand for which will be engines for five years or something like that, now people are
filled by the numerous parked MDs. If youve got any left on saying we want to lease it for 10 years and the majority of
your portfolio, forget a strategy for them, its too late, he quips. leases secured within the last two years have been on this basis.
Residual values for the CFM56-3C1s have also been marked The plan is to have as few engines off-lease as possible; ELFC has
down, though to a much lesser extent; but weve anticipated juggled its portfolio and clients to manage this well, however:
that and have moved some out of the portfolio and depreciated Sometimes we get an engine back and dont have anywhere to
others sufficiently. He adds that whether the engine will reach place it. In that scenario we go into the short-term leasing
its former value again is unknown and depends not only on air business, leasing for three months or a month, even. In todays
traffic demand but also the cost of oil. market where clients are scuffling to find ways to reduce costs,
flexibility is a virtue. Airlines think, well well have this engine for
Also having taken a knock recently is the CFM56-7B: With the eight years and with the best planning in the world youve
demand for short-term leasing being down at present the short- actually no idea whether its going to be needed for eight or
term lease rates are very low, notably on the brand new Dash 7Bs seven or 10 All sorts of variables can change the amount of
because everybodys got them The economic utility value of time you may need an engine for.
those engines is for the time-being knocked-down, but of course
theyll come back because it is a new engine. Yet according to With this in mind, ELFC offers engines through its syndication
Sharp, demand for the CFM56-5C4 has maintained itself for platform, which is a way for the company to reduce large
longer than expected due to delays in the 787 programme. Its financial exposures and offers investors an attractive rate of
something that Ive kept under my hat because weve got quite return and a plausible exit strategy. As explained by Sharp, the
a lot of these -5C4s on the earlier A340s We had planned to service involves bundling a package of engines with long-term
move them out of the portfolio but people have asked for them leases in place which are then offered to investors on a part-share
for another six months, and another six months. basis. We will manage the engine throughout the duration of
the leases and we will then remarket them or sell them off at the
Beating the odds end of those leases. Under its belt is a 51/49 joint venture with
Of late, the company has acquired new CFM and V2500s Volvo, which is now closed, as well as four other JVs currently still
engines as well as the odd CF6 and regional jet engine. Like underway. The first was with DVB Bank and Deucalian Funds,
any good financial manager, we like to have our portfolio spread later they signed with Sumitomo Corporation, Mitsubishi Leasing
amongst different types of engines, servicing different aircraft and again with the German KG fund, GSI Fonds. The New Year
and therefore different markets [long-haul, short-haul, regional will bring the announcement of a fifth JV, which at the time of
jet, cargo etc.] so if one area catches a cold, or perhaps this year going to press was being firmed up, but with the success of the
swine flu even, then the other areas will hold it up. Yet he past two decades as an indicator, this will not be the last we will
explains that ELFCs portfolio renewal will always involve hear from ELFC.
expanding the number of engines currently in mainstream
production, such as the V2500 and CFM56-5Bs and -7Bs, The next twenty years will certainly be interesting, says Sharp,
allowing the older types to drop off we will need to keep on our toes, anticipating what the market
is doing and trying to get in front of that. I like to paraphrase
The beautiful thing is that we have been able to take advantage what Warren Buffet said Employ the right people, delegate and
of it [low engine prices], other people havent because their then look out of the window, because without looking at the big
funding sources dried up, Sharp says. Owned by BTMU Capital picture you cant succeed in the longer term.
Corporation, a wholly-owned subsidiary of The Bank of Tokyo
Mitsubishi UFJ, Ltd ELFC has passed through the recession with
the relative peace of mind of a continuing supply of funds.

Yet it has continued to trade well; though there have been


deferrals and restructured payments, none of its engines in 2009
were returned due to defaults on payments and the company
saw a lease renewal rate of 80 per cent in 2008, slipping slightly
to 75 per cent in 2009. Of a portfolio of about 220 engines
Sharp says that during 2008 we had either one or two off-lease
engines at one time, it increased to about six in 2009, but he
says that the small percentage of off-lease engines is
manageable. Were beating the odds, though there are risks in
the future still.

The temporary lack of competition has been a benefit to ELFC,


weve had the market largely to ourselves, he says, adding
that a number of leasing companies have not been in business
this last year. In addition to this is the increased demand for sale
and leaseback deals as airlines have been unable to finance past
orders. According to Sharp the large majority of the companys
acquisitions over the past two years have been on the basis of a
sale and leaseback, Its been non-risk business, we have not had
to go to the manufacturer and place an order for 10 engines and
then fret about placing them as they get delivered. Everythings
been a sale and leaseback.

Airline Fleet Management | 15


FOCUS African Skies

Following the implementation of air liberalisation policies in airlines are carrying 75 per cent of the air traffic between Africa
the US and Europe, in 1988 African states arrived at a general and other regions. According to AFRAA, 12 airlines from Europe,
nine from the Middle East, 11 from Asia, two from North
consensus on the need to draft a new African air transport America and two from Australia, total 38, fly to Africa.
policy to liberalise the African market. This agreement,
Industry analysts agree that the protectionist BASAs are
dubbed the Yamoussoukro Declaration, intends to avoid the hampering development of the airline industry in Africa. Certainly,
bilateral air service agreements (BASAs) that impose several African civil aviation authorities recognise the impact of the
restrictions on African carriers and create a single domestic BASAs. Accordingly, they started taking measures to address the
issue of market access some years back. With the view of
market in Africa. Unfortunately, this has never been realised. liberalising the internal African air transport market, in October
Our Africa correspondent, Kaleyesus Bekele, investigates the 1988 African civil aviation ministers gathered in Yamoussoukro in
the Republic of Cote D Ivoire and signed the Yamoussoukro
problem with liberalising the African sky. Declaration on a new African Air Transport Policy.

This declaration was the result of a collective consensus that African


nations must prepare for the adverse effects of deregulation in the
US and the air transport liberalisation policies of Europe.

AFRICAS Difficult market access


Since the start of the Declaration, the issue of market access has
been at the centre of development strategy. The main aim has

DILEMMA IN
been to take away limitations, imposed by the various bilateral
and multilateral agreements, to create a single domestic air
transport market in Africa.

LIBERALISING
Tewodros Tamrat, director corporate and industry affairs with
AFRAA, explains: The main thrust is the liberalisation of the
internal African air transport market. It is intended to remove
restrictions imposed by the traditional BASAs which are the basis

ITS SKY
of the relation between states currently.

I HAVE BEEN TRAVELING A LOT ACROSS CENTRAL AND WEST


African countries for many years and I have witnessed the
difficulties the traveling public is faced with when moving from
one point to another in Africa, often necessitating transit through
Europe to go to a neighboring African country just across the
border. This statement was made by Lydia Grunitzky, CEO and
founder of Star Equatorial, a newly-private airline based in
Equatorial Guinea.

African airlines have limited access to the global market through


alliances and partnerships. They have a fragmented and poor
market network even within Africa mainly because African skies
are regulated by complete protectionist BASAs. This can be
evidenced by the absence of efficient air transport services
between African nations. As Grunitzky stated, travelers are some
times forced to go to Europe on transit flights en route from one
African nation to another.

Christian Folly-Kossi, former secretary general of the African


Airlines Association (AFRAA), comments; African airlines hardly
ever forge partnerships among themselves. The BASAs have
definitely limited their market reach and scope.

While African airlines are suffering from poor market access as


the result of protectionist air service agreements, non-African
carriers are taking the opportunity to develop their network in
Africa. Mega carriers from the Middle East and Europe are
dominating African skies, says Girma Wake, CEO of Ethiopian Girma Wake, CEO of
Ethiopian Airlines
Airlines, which serves 31 international destinations in Africa.
Wake adds: What we [Africans] should know is that foreign

16| Airline Fleet Management


Tamrat, a member of the Declaration monitoring body under the In the words of Tamrat, another major benefit is that the
auspices of the African Union, says these agreements normally Declaration will facilitate cross-border investment into African
specify and limit the number of airlines that can be designated airlines either from within the continent or outside, as it has
to operate on the specific routes, the type of aircraft capacity, the done away with the restrictive national ownership requirement.
frequency and the airport into which airlines can operate. It Liberalisation of air transport within Africa is a key component of,
may also require airlines to obtain approvals from the respective and essential to, the successes of the broader economic and
countries on the type of fares, terms and conditions. Further political integration agenda of the continent. Without an
more, traditional BASAs require substantial ownership of the efficient air transport system to facilitate the free movement of
airline by the government of the designating state if an airline is people, the integration objectives of the continent will be difficult
to be allowed by the other state to operate to/from its country. if not impossible to achieve, he concludes.

Tamrat believes the removal of these restrictions will give airlines


the freedom and flexibility to operate whenever and wherever it Failure to implement reform
is economically viable and profitable. It will enable airlines to In 1999 the Yamoussoukro Decision (YD) [which followed on
establish an efficient route network, allowing efficient utilisation from the Yamoussoukro Declaration] was endorsed by African
of their aircraft capacity. More importantly it will allow heads of state. It entered into force in August 2000 with a two-
competition among African airlines, encouraging them to be year grace period. The YD was supposed to be fully implemented
more efficient and provide lower fares and quality service to in August 2002 and should have replaced any bilateral or
consumers. The increased competition will strengthen the multilateral agreement on air services between parties which are
African carriers and prepare them for the inevitable liberalisation incompatible with it.
and globalisation of the international market.
However, to date, the YD has not been implemented. Nine years
According to Tamrat, African traffic in many countries is of low after its adoption by African leaders, issues of market access
density and fragmented, limiting the growth potential of African remain regulated by a complete system of protectionist bilateral
airlines. He comments: It also restricts connectivity and limits service agreements.
frequency at times forcing passengers to go via Europe. The
opening up the internal market will give airlines the opportunity As a result, the air transport in Africa continues to suffer from
to consolidate traffic, create economies of scale and develop many dysfunctions including a poorly developed network of
regional and sub-regional hubs. This in turn will enable them to scheduled services, prohibitive cost of air travel and loss of market
generate sufficient traffic on a sustainable basis to feed into their share to mega-carriers from Europe and the US.
international flights.

However, to date, the Yamoussoukro Decision has not been implemented. Nine
years after its adoption by African leaders, issues of market access remain
regulated by a complete system of protectionist bilateral service agreements.

Airline Fleet Management | 17


At the 2007 African Air Transport Development Forum held in
Addis Ababa the African Union (AU) tried to convince member
states to implement the YD. But 34 countries (mainly
Francophone) didnt agree with the proposal saying they were
not ready to open up their market. However, countries such as
Ethiopia, Kenya, Morocco, Egypt and South Africa are demanding
full implementation.

Folly-Kossi says to address the issue, the three African regional


economic communities Common Market for Eastern and
Southern Africa (COMESA) Southern African Development
Community (SADC) and East African Community (EAC) have
put in place joint competition regulations. He adds that the
Economic Community of Western African States (ECOWAS) is in
the process of adopting competition regulation for its region. The
AU is also working to establish harmonised continental
competition regulations. Folly-Kossi hopes that all these efforts

The opening up the internal market will give airlines


the opportunity to consolidate traffic, create economies
will address the concerns some countries have about full
implementation.

[This] is progressing very slowly. Much of the progress made


both at continental and regional levels is in the area of putting in
of scale and develop regional and sub-regional hubs. place the legal and institutional framework required for
This in turn will enable them to generate sufficient implementation, says Tamrat.

traffic on a sustainable basis to feed into their The AU and the African Civil Aviation Commission (AFCAC) have
international flights. been working to finalise the outstanding legal and institutional


- Tewodros Tamrat, director corporate and industry affairs with AFRAA
framework. It has been decided by the African ministers of
transport that AFCAC be the executing agency.

However, work to provide the necessary legal document that will


The foreign mega-carriers continue to capitalise on the enable AFCAC to take the responsibility has not been completed.
weaknesses of the bilateral systems to make inroads into the The AU and AFCAC are working to finalise this document which
domestic African market. They are poised to make even deeper would need to be adopted and signed by African states. The
inroads with the new EU community clause and negotiating absence of an executing agency has been one of the main
mandate, to which Africa is yet to develop a common position. stumbling blocks for the speedy implementation of the YD. In
respect to the fears of unfair competition, the AU has hired a
Folly-Kossi says that the major challenge in the implementation of consultant to prepare a harmonised continental regulation, which
the YD is that some of the institutional and legal frameworks is expected to be submitted to the next ministerial meeting to be
required for the implementation of the decision have not been held this year. The AU has also engaged the service of a consultant
put in place. to study and prepare a dispute settlement mechanism for disputes
arising among states relating to the YD. Much more progress has
These are the executive agency, competition regulations and been made in the various regional economic communities. Again
dispute settlement mechanisms. The executive agency, once here most of the work is in putting in place various regulations that
established, will have the authority not only to follow-up, but also are required to implement the YD such as competition laws, airline
to enforce implementation of the decision, he said. licensing, safety oversight, and consumer protection. Tamrat
comments, In all cases we see in the continent an encouraging
AFRAA, in co-operation with New Partnership for Africas trend towards less restrictions on traffic rights, capacity and
Development (NEPAD), have recently started a new initiative that frequency. However, these are still done on a BASAs basis and not
will facilitate implementation by states that are willing and ready necessarily based on the YD.
to do so without waiting for all the others to start at the same
time. CREW (The Club of Ready and Willing) has received support Wake agrees with what Tamrat about the slow pace of the effort
by various states and will be launched as soon as preparation to implement the YD. However, he is not discouraged. There are
is completed. some developments though they are happening slowly. What we
must know is that while we [Africans] are debating on
The prompt and uniform implementation of the YD is seen by liberalisation, foreign airlines are carrying the majority of the
many in Africa as a key factor for the transformation of the African air traffic. He adds, whether the YD is implemented or
continents air transport industry. not, some airlines will prosper and others will lose. The
implementation of the YD will bring more opportunities. Ethiopian
Fears of unfair competition has signed open skies agreement with more than 20 countries
However, some African countries with small and weaker air- based on the principles of the YD.
lines are concerned that full implementation may lead to the
disappearance of their airlines as a result of anti-competitive AFRAA is calling on the AU for a strong political push on member
behavior such as abuse of dominant positions by bigger airlines. states towards the full implementation of the YD. We should not
These countries have been demanding the establishment of wait for all the 53 countries to implement the YD at once, Kossi
competition regulation to ensure fair competition and a level said. Let us start with those who are ready and willing to
playing field. implement and others will follow.

18| Airline Fleet Management


DEALS NEWS & BANK RANKINGS June 09 January 2010

Fleet Finance deals report


Sale Lead Law Date
Borrower Country Asset figure ($m) Structure arranger Lessor firm closed
flydubai Dubai 4x 737-800s $320m Sale and Leaseback GECAS N/A Undisclosed June 1
The sale and leaseback agreement covers aircraft due to be delivered to flydubai from Boeing in 2009, with two expected in July, one in October and one in December.
Sichuan Airlines China 6x A320 Undisclosed Leased China Ex-Im AerDragon Richards Butler June 22
Aviation Partners with Reed Smith
Remarks: AerDragon purchased 6x A320 for $230m, via a term loan funded by China Ex-Im. The aircraft were then leased to Sichuan Airlines.
Cyprus Airways Cyprus 2x A320s Undisclosed Sale and Leaseback Cabot Aviation TCS Investment Undisclosed June 30
Remarks: TCS investment purchased and leased back 2x A320 (MSN 037,038) owned and operated by Cyprus Airways since new. Lease terms until end of October 2009.
Virgin Atlantic UK 4x A320 $221m collectively Leased HSH Nordbank AerCap Norton Rose June 30
6x A320 Pre-delivery Purchase N/A
Go Air India A320-200 39.2 Export Credit Loan Calyon ALAFCO Norton Rose June*
MSN 3915
Aeroflot Russia A330-300 78.6 Export Credit Loan Calyon AerCap Norton Rose June*
MSN 1014
Aer Lingus Ireland A330-300ER 79.6 Export Credit Loan Calyon N/A Norton Rose June*
MSN 1025
Garuda Indonesia A330-300 78.6 Export Credit Loan Calyon AerCap Norton Rose June*
MSN 1020
Korean Air Korea 777-300ER 285.6 Export Credit Loan (Ex-Im US) Calyon N/A Vedder Price June*
MSN 37643
Ryanair Ireland 6x 737-800 158.40 Export Credit Loan (Ex-Im US) Calyon N/A Clifford Chance June*
MSNs: 35012, 35013, 37536, 37537, 37538, 37539
Wizz Air Poland 3x A320-200 Undisclosed Pre-delivery Purchase DVB N/A Undisclosed June
KLM Netherlands 1x A330-200 Undisclosed Term Loan (Operating Lease) DVB ILFC Undisclosed June
China Eastern Airlines China 1x 737-800 Undisclosed Term Loan (Operating Lease) DVB ALAFCO Undisclosed June
AWAS Dublin 2x A330-200 Unknown Pre-delivery Purchase DVB N/A Undisclosed June
Yet to be leased
AerCap Netherlands 10x A330 $221m Pre-delivery Purchase HSH Nordbank AerCap Undisclosed July 2
Yet to be leased
SIA Singapore A330-200 47 Export Credit Loan Calyon LCI Norton Rose July 22
MSN 1012
Olympic Greece A319-100 29.7 Export Credit Loan Calyon RBS Reed Smith July 23
MSN 3905
Star Peru Peru BAe 146-300 Undisclosed Purchase ALM N/A Undisclosed July 28
Remarks: The aircraft (serial number E3185, registration G-JEBB) was previously owned and operated by flybe.
Thai Airways Thailand A330-300 42 Export Credit Loan Calyon N/A Clifford Chance July 29
MSN 1035
Emirates UAE 777-300ER 135 Export Credit Loan (Ex-Im US) Calyon N/A Milbank July 29
MSN 38589
TAM Brazil A320-200 33.2 Export Credit Loan Calyon RBS Reed Smith July 29
MSN 3972
TAM Brazil A320-200 32.4 Export Credit Loan Calyon RBS Reed Smith August 6
MSN 3750
Tiger Singapore A320-200 30.5 Export Credit Loan Calyon RBS Reed Smith August 7
MSN 3734
WDL Germany BAe 146-300 Undisclosed Purchased Cabot Aviation N/A N/A Sept 18
Remarks: The aircraft is one of two purchased from KLM Cityhopper. The first aircraft, serial number E3157, was delivered on January 23, 2009 and the second, E3142, was 18, 2009. These aircraft were previously operated by Air
UK, KLM UK, Buzz and CityJet.
Astraeus UK 757-200 Undisclosed Leased GKL GKL N/A September
The aircraft formerly belonged to Zoom
UPS USA 2x 747-400Fs Undisclosed Purchase Cabot Aviation N/A Undisclosed September
Remarks: Previously owned by Cargolux. MSNs 25632 and 25866
Air Berlin Berlin 2x A320-200 Undisclosed Purchase and Leaseback GECAS GECAS Undisclosed Sept 29*
Remarks: The aircraft (serial numbers 4013 and 4033) are part of an existing order agreement between Air Berlin and Airbus. Oct1*
Air Astana Kazakhstan 2x E190LR Undisclosed Leased Jetscape Jetscape N/A October 15
Etihad UAE 8x a/c (including 2x A340-600) $233m Purchase HSBC N/A Undisclosed October
6x a/c Undisc 2x A340-600
Remarks: The loan is guaranteed by the UKs Export Credits Guarantee Department (ECGD); re-insurance is given by Compagnie Francaise dAssurance pour le Commerce Exterieur of France (COFACE) and EULER HERMES. HSBC is
acting as the mandated lead arranger, lender, facility agent, security trustee and hedge provider and is providing $122m to the airline over a 12-year period.
Etihad UAE Undisclosed $111m Purchase Landesbank Baden N/A N/A October
Wuerttemberg
Remarks: Landesbank Baden Wuerttemberg is acting as mandated lead arranger, lender, facility agent and security trustee; debt is placed with SkyBlue Capital. This loan is also guaranteed by the UKs Export Credits Guarantee
Department (ECGD); re-insurance is given by Compagnie Francaise dAssurance pour le Commerce Exterieur of France (COFACE) and EULER HERMES.
Libyan Airlines Libya 2x ATR42-500 $35m Purchase ATR/ Libyan N/A Undisclosed October
AvtecUSA USA MD-82 Undisclosed Purchase Cabot Aviation N/A Undisclosed October
Remarks: Previously American Airlines, sold by Verizan Capital. Manufactured 1985
AerCap Netherlands 4X A330 See below Pre-delivery Purchase AerCap/ China Dev Bank N/A Undisclosed November
Remarks: China Development Bank provided funding for $86m of pre-delivery payments and a $272m long-term funding facility. The aircraft are part of AerCaps 30 A330 order placed in 2006/2007.
Tiger Airways Singapore A320-200 Undisclosed Sale and Leaseback GECAS GECAS Undisclosed November
Remarks: The aircraft was the second of two delivered from GECAS to Tiger on sale and leaseback - part of Tigers 66 aircraft firm orderbook with Airbus. MSN 4053
Gill Group UK BAe ARJ146 Undisclosed Purchase Gill/ BAE N/A Undisclosed November
Turkish Airlines Turkey 3x A330-300 Undisclosed Purchase Turkish N/A Undisclosed November
South Africa Airlines South Africa 4x ERJ 135 Undisclosed Leased ECC ECC Undisclosed January
Remarks: KAL is leasing the aircraft, serial 23006, which was previously registered ZS-OVE and is now AP-BIR, to Shaheen Air. The aircraft is the third of seven 737-200s bought by KAL Aviation from Aerotrans Leasing through
Cabot Aviation.
Jetlink Express Kenya 1x BAe 146100 Undisclosed Wet Lease Undisclosed Undisclosed Undisclosed Undisclosed
Remarks: Leased from Albanian Airlines
SunExpress Turkey 6x 737-800 $460m Pre-delivery Purchase Undisclosed N/A Undisclosed Undisclosed
Copa Airlines Panama 13x 737-800 $1bn Undisclosed Undisclosed N/A Undisclosed Undisclosed
Remarks: All aircraft are powered by IAE V2533-A5 engines.
* Date of aircraft delivery

Airline Fleet Management | 19


TRADING, LEASING & FINANCE Engine Ownership

While the Kingdom of the Netherlands has not adopted the


Cape Town Convention, Patrick Honnebier writes that the
rulings of its Supreme Court indicate that this treaty
determines that aircraft engines can be financed separately
in this jurisdiction.

WHO OWNS
THE ENGINE?
THE DOCTRINE OF
ACCESSION EXPLAINED
THE AIM OF THIS ARTICLE IS TO DISCUSS THE ISSUES IN AIRCRAFT
engines financing that arise under the provisions of the
international treaties and the laws of the Kingdom of the
Netherlands. Recently the Supreme Court of the Kingdom of the
Netherlands (the Kingdom) declared that the drafts of the
international commercial conventions can fill the gaps in the
existing laws. It does not matter whether or not the treaties have
been ratified. The Courts rulings are also valid in relation to
the Convention on International Interests in Mobile Equipment
(convention) and the Aircraft Equipment Protocol (protocol)
which were realised in Cape Town in 2001. While the Kingdom
has not yet adopted these treaties, it is submitted that they
are the Supreme Courts proper source of law to decide the
issues regarding the international financing of aircraft engines.
The Kingdom of the Netherlands consists of: the Netherlands,
Aruba and the Netherlands Antilles. The three jurisdictions are
autonomous and they have their own aviation finance laws. To a
large extent, however, the relevant laws are identical. The
Supreme Court decisions are of paramount significance in the
three constituent states and of considerable importance to the
international aviation finance world.

The aircraft engine financing industry is inherently international.


However, the legal implications of a cross-border transaction are
not always correctly understood and the fundamental legal
differences between the two existing aviation finance treaties are
not properly appreciated. On the one hand the creation, validity
and effects of the sale of and the international interests in aircraft
equipment are regulated in the Cape Town Convention and
Protocol. These instruments provide for a modern international
property law regime. On the other hand only the recognition of
some rights is addressed in the Convention on the international
recognition of rights in aircraft (Geneva Convention, 1948). This
is basically an outdated and inadequate conflict of laws treaty.
However, several lawyers do not comprehend the differing legal
objectives of the two treaties. This has led to existing
misunderstandings in the international aviation practice. More

20| Airline Fleet Management


Definition of accession:
Accession (from Lat. accedere, to go to,
to approach), in law, a method of
acquiring property adopted from Roman
law (see: accessio), by which, in things
that have a close connection with or
dependence on one another, the property
of the principal draws after it the
property of the accessory, according to
the principle, accessio cedet principali

Airline Fleet Management | 21


The frivolous notion concerning the title-shift
of engines
For many years some Dutch aviation lawyers have suggested that
the doctrine of accession applies to the financing of aircraft
engines in the Netherlands. Without properly scrutinising the
validity of this view, several foreign lawyers passed it on to their
clients abroad. This has resulted in the devastating impact of the
title-shift theory on the universal aviation practice. The accession
doctrine implies that an engine which is attached to an aircraft
legally turns into a component part of an aircraft. It has been
alleged that the sole requirement for becoming a component
part is a mechanical connection. Thus the owner of the aircraft is
supposed to be the owner of the engine. The suggested transfer
of title to engines occurs by operation of law. This term expresses
that the title-shift requires no consent of the owner of the
engine. The accretion principle would make the separate
financing and leasing of engines impossible.

Some Dutch lawyers even suggest that XVI of the Geneva


Convention dictates a strict accretion-rule. However, this
assumption is in conflict with the practical intent and legal
structure of this treaty. While it aims to facilitate the international
financing of aircraft, the alleged title-annexation theory frustrates
its goal. Moreover, it does not provide for a property laws regime
specifically, at the universal level there is much debate among governing the creation, validity, and effects of rights in aircraft. It
lawyers as to whether or not the ownership of a leased engine is merely obliges its Contracting States to recognise four types of
transferred to the owner of the aircraft when the former object consensual rights in aircraft. From the outset it is stressed that
is installed on the latter. This legal principle is called the doctrine the Geneva Convention does not purport to say whether or not
of accession. With reference to this theory, other terms are: the non-consensual ownership of an aircraft engine has been
accretion, title-shift, title-transfer and title-annexation (variably transferred to the owner of an airframe. Thus, the support of the
used in this publication). In the 1990s the international engines Dutch lawyers for the accession doctrine derives solely from a
dispute was initiated by some publications suggesting that the non-existent international property law regime. Their frivolous
accession theory applies to aviation financing transactions in the opinion should be dismissed.
Netherlands. Accordingly, there is no assurance as to whether or
not the rights of the owners and financiers of engines are On the other hand, the Cape Town convention and protocol have
guaranteed in this jurisdiction. An additional problem is that established the needed substantive property laws. Their
engines are generally financed by means of cross-border combined regime governs the creation, validity and effects of
arrangements. Moreover, groups of airlines have entered into a international interests in aircraft engines. The two instruments
variety of international engine-pooling agreements and some of have codified the prevailing legal opinion of the international
the arrangements have strong connections with Dutch airlines. aviation practice. The protocol explicitly ensures that the
The benefits which these agreements aim to bestow on the registered international interest in an engine shall not be affected
financiers and carriers are often frustrated by the negative by its installation on, or removal from, an aircraft. In sum, there
impact of the alleged Dutch accretion theory. is no existing international aviation finance treaty which dictates
that the accretion principle must be observed.
At the outset it must be observed that this article does not agree
that the accession doctrine is applicable to the financing of
engines in the Netherlands. To the contrary, it is argued below
that this controversial view is not substantiated by underlying
national and international laws and that the convention and
protocol determine that no annexation of engines takes place in
the Netherlands.

At present the value of one aircraft engine can run up to more


than $20m [For the availability of the various types and prices of
engines and aircraft, see the back pages of AFM.] As substantial
funds are needed, it is customary that engines are internationally
financed separately from airframes. When an engine is removed
for overhaul, it is often replaced by a spare engine and the engine
is often not re-installed on the same airframe. To avoid substantial
expenses co-operating airlines enter into engine-pooling
arrangements. As a result of the extremely movable nature of
aircraft engines, generally several jurisdictions are involved in
these agreements. Therefore, these transactions raise a number
of questions concerning the changing legal status of an engine at
the global level. These matters are of immediate concern to the
owners of the aircraft and engines.

22| Airline Fleet Management


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The Cape Town convention is intended to standardise transactions involving movable property.

The grave consequences of the alleged title- From considering the above observations, the reader may
shift theory appreciate that the application of the accession doctrine to the
It has been wrongfully proposed that the accession doctrine is financing of aircraft engines is inappropriate. The legal un-
applicable to engine financing in the Netherlands and globally. certainty, which is created by this theory, leads to economic risk.
On the other hand, the same commentators who proposed this This obstructs the availability of funds from the private sector and
legal theory have accurately portrayed its negative practical increases the cost of financing expensive engines. Moreover, due
consequences as follows: to the wrongful application of the Geneva Convention the
acquisition of engines is hindered at the universal level. With this
Any lawyer involved in aircraft finance transactions will be important conclusion in mind, it is difficult to envisage a Dutch or
able to tell you juicy stories of security rights which are foreign court applying the accretion principle in its quest for a
doomed, judgements which are likely to be unenforceable in justifiable ruling. Nevertheless, until today the same Dutch
other jurisdictions and third-party rights which may render a lawyers keep pushing this legal theory.
hundred-page contract useless.
It is not surprising that many in the aviation community consider
The various scenarios [concerning engine financing] discussed doing business in the Netherlands a risky enterprise. This
above invariably describe a lawyers paradise which is, as we all conclusion is substantiated by the black lists which state that
know, synonymous to a clients depression it is an accession-risk jurisdiction. For example, one of the
largest aircraft and engine lessors in the world specifically refers
Security rights on engines and spare parts which are to the alleged accretion risk in Aruba and the Netherlands in a
enforceable in one jurisdiction may not be enforceable in memorandum:
another jurisdiction. In certain jurisdictions, an aircraft engine affixed to an aircraft
may become part of, or an accession to, the aircraft, such that
The problem is obviously that any engine will sooner or later the ownership rights of the owner of the aircraft supersede the
be attached to an aircraft and that restrictions in that respect ownership rights of the owner of such aircraft engine. In such
may be commercially unacceptable. jurisdictions, if the owner of the aircraft has pledged the aircraft
as security to a third-party, that third-partys security interest may
It is noted that diligence is required not only when the engine also supersede the ownership rights of the owner of the aircraft
lessee is a Dutch airline; if a non-Dutch engine lessee makes the engine. This legal principle could limit [the] ability to
engine available to an engine pool, it could well be that the repossess an engine in the event of a lease default while the
engine ends up on the wing of a Dutch registered aircraft. aircraft with the engine so installed, remains in such a
jurisdiction. Countries whose courts follow this interpretation as
Fortunately, the Dutch legislator (sometimes) listens to what of the closing date include Aruba, [] the Netherlands [].
practitioners say [about aviation financing].
The cited document notes that convention and protocol override
*It is noted that all the comments, references, articles and the accession principle. It emphasises, however, that these
documents that are cited in the present contribution are on file treaties have not been adopted by Aruba and the Netherlands.
with the author. This article strongly opposes the conclusion of the aircraft and

24| Airline Fleet Management


The decisive rulings of the Supreme Court
In the international NDS Provider case, once more the Supreme
Court of the Netherlands had to fill the gaps that existed in the
applicable commercial laws. (See Supreme Court, (Hoge Raad),
NDS Provider, C06/082, 2008, 177.) The court ruled explicitly
that the draft provision of an international convention affirmed
its line of reasoning. This international case concerned maritime
tort laws. As the dispute was not solved by the text of the
applicable law, the court had to establish its goal and effects. In
its quest for the proper law the court explicitly applied the Draft
UNCITRAL Convention on the contracts of the international
carriage of goods wholly or partly by sea. In essence, in the NDS
Provider ruling the Supreme Court confirmed that international
treaties are the appropriate tools to interpret the goal of, and to
fill the gaps in, the (ambiguous) laws. This rule is valid, regardless
of whether the conventions are in force or have been ratified by
the Netherlands.

This contribution appreciates that NDS Provider case concerned a


liability in tort issue and not the separate financing of aircraft
engines. However, the reasoning of the Supreme Court is
pertinent in regard to the interpretation of the existing accession
laws concerning engines and aircraft in the Netherlands. It is
submitted that the current international aviation finance
regulations, whether or not they have been ratified, fill the gaps
in the national laws.

General Dutch law covering engine finance


The Supreme Court of the Kingdom had undertaken a similar
engine lessor that the courts of Aruba and the Netherlands apply legal research to establish the appropriate law in the landmark
the accretion principle to aircraft engines. As is corroborated case concerning a tow-boat called Egbertha (Sleepboot
below, until today all the litigated engines disputes in these Egbertha). (See Supreme Court, 26 March 1936, NJ 1936, no.
jurisdictions have clarified that no accretion of aircraft engines 757.) The court had to decide whether an engine that was
takes place. Moreover, it is anticipated that the Supreme Court installed in a tow-boat had legally become a component part of
will rule in the same direction. this ship. It judged that the prevailing view in a particular industry
dictates whether a title-shift takes place. The court ruled that the
Furthermore, the VP, Legal, of a major aircraft lessor has prevailing legal opinion considered an engine to be a part of the
expressed his concern about the alleged Dutch and international tow-boat. This view was expressed in a Dutch Royal Decree. A
title-shift issue as follows: similar provision was contained in the Convention concerning
the recording of rights in inland vessels (Geneva, 1930).
In summary, it could be said that neither treaty deals explicitly
with transfer of title to engines by operation of law but that the It is noted that this instrument was not ratified by the Kingdom
Geneva Convention, which was never very widely adopted, in and it never entered into force. Nonetheless, the court ruled that
any event had no effect on such transfer whereas the provisions this treaty expressed the prevailing legal opinion that the engine
of the Cape Town Convention, which is growing in importance acceded to the tow-boat. The reasoning of the court is that
as it is increasingly adopted by more and more states, take treaties reflect the prevailing view existing in a specific
precedence over any such transfer under national property law international industry. The significant ruling of the Supreme
rules so long as the proper registration in respect of the Court in the tow-boat Egbertha case has been codified in the
international interest in the engine is made. It is to be hoped general accession laws of the Kingdom. These state that the
that this issue will fade away once the Netherlands becomes prevailing view decides whether a movable object is considered
bound by the Cape Town Convention. to be a component part of another movable asset. In addition, an
object that is affixed to the main asset in such a manner that it
To make the above deliberations complete, it is noted that the cannot be detached without substantially damaging either object
above-quoted Dutch critical comments have been published becomes a part of the principal asset.
between 1992 and 2008. During this long period of time, in
sophisticated jurisdictions the existing inadequate laws were
adjusted to satisfy the contemporary requirements of a specific Problems concerning the alleged Dutch
industry. According to the above citations, a desired change of accession of aircraft engines
the laws is also possible in the Kingdom of the Netherlands. Article 8:3a(2) of the Civil Code of the Netherlands, Aruba and
Thus, it is incomprehensible that during all these years the the Netherlands Antilles addresses the accession of aircraft
Dutch lawyers have undertaken remarkably little to change the engines to aircraft:
alleged unacceptable aviation finance laws. What was their
motive for not requesting the Dutch legislator to provide for a The airframe, engines, propellers, radio apparatus, and all other
legal regime facilitating the acquisition and use of engines? goods intended for use in or on the machine (toestel), regardless
Without any doubt, their initiative would have cured the whether installed therein or temporarily separated there from, are
depressions of their clientele. a component part (bestanddeel) of the aircraft.

Airline Fleet Management | 25


independent movable things [...] as long as they are not installed
on an aircraft and can therefore, in principle, be pledged. I say in
principle because an engine may already lose its independent
status before instalment to the aircraft. So if we would have a
one-aircraft-operator having a spare engine on the shelf, one
could argue that [under article XVI of the Geneva Convention]
this engine is intended for use in that aircraft and consequently
is part of that aircraft.

The current contribution agrees with these comments, as the


decisive requirement of the intended use of an engine in that
specific aircraft is most clear. An attachment is not required to
decide whether an engine is, or is not, a component part. The
same Dutch lawyer has persisted in other publications, however,
that the only criteria for the title-shift is the instalment. It is
evident that this devoted proponent of the accession doctrine
contradicts himself. Further consideration, therefore, need not be
given to the erroneous interpretation of the Dutch laws and the
relevant provision of the Geneva Convention.

Nevertheless, the text of the special Dutch law does not clarify
whether an engine can be intended for use in a specific aircraft
per se. As almost all engines are used in a flexible manner, can
they become component parts of an aircraft at all? The above-
cited law does not answer these questions. Accordingly, this gap
must be filled by the general accession law which states that the
prevailing opinion of the relevant industry decides whether a
title-shift occurs. The Supreme Court ruled in the NDS Provider
and tow-boat Egbertha cases that the international conventions,
regardless of whether they have been ratified by the Kingdom or
not, are workable tools to fill the gaps in the applicable laws.

The Cape Town convention applies in the


Netherlands
The only existing aviation finance regimes providing for uniform
property laws are the Cape Town convention and protocol.
Keeping the reasoning of the Supreme Court in mind, these
instruments express the prevailing legal opinion of the
international aviation practice that no accession of aircraft
engines takes place. They are distinct aircraft objects which can
be financed separately. The international interests which are
created in engines can be registered in the International Registry.
Considering the courts view that international treaties clarify
legal uncertainties, regardless of whether or not they have been
ratified, it is anticipated that the convention and protocol will
support its conclusion that engines are not component parts of
This special law establishes that the aircraft includes its engines, aircraft.
contingent upon the requirement that these objects are
intended for use in the machine (aircraft). The sole re- The concurring view of the lower courts in the
quirement for a potential title-shift is that an engine is destined Netherlands
for use in a specific machine. If an engine is intended for use The alleged accession of aircraft engines initiated important court
in any aircraft it is not a component part. However, in the cases in Aruba and the Netherlands. These court rulings are in
(unlikely) event that the legal qualification of a component part line with the regime of the Cape Town convention. In 2003 the
is established, this fact does not change when the engine is Court of First Instance of Aruba judged that the accession laws
temporarily detached for a repair. There is no other do not apply to engines that are attached to aircraft. (See Volvo
differentiating criterion, as a mechanical connection between Aero Leasing/AVIA Air, June 25, 2003, no. 121.) The court
the engine and aircraft is not required. (See the Dutch decided that it cannot be validly argued that the leading
Governmental Explanatory Memorandum 1955-1956, no. 4134, prevailing view of the aviation industry determines that engines
p. 9.) are component parts of aircraft.

The above-quoted Dutch lawyers suggesting that the accession In 2002 the Court of Appeal in Den Bosch, the Netherlands, ruled
doctrine is applicable, base their view only on the alleged in the same way as the Court in Aruba. In the AAR Aircraft &
requirement of the connection between the aircraft and the Engine Group/Aerowings case it had to decide whether the
engine. They suggest that the installation decides whether an accession theory was applicable to a leased aircraft engine. (See
engine becomes a component part. At the same time, however, Court of Appeal (Hof) Den Bosch, 15 August 2002, SES, 2003,
one of the strongest supporters of this view has said: no. 56.) The foreign lessor intended to repossess its engine from
Engines are [under Dutch law and the Geneva Convention] the Netherlands. The court concluded that under the applicable

26| Airline Fleet Management


English law no title-shift occurred. In addition, the court Concluding remarks
reasoned that if Dutch property law would have been applicable, This article neither agrees with some Dutch lawyers that the
no accession would have taken place. To a large extent the court doctrine of accession applies to aircraft engines in the
based its decision on the following particulars. The legal Netherlands, nor concurs with their suggestion that the Geneva
department of the Dutch airline KLM had provided the court convention validates this theory. To the contrary, these aviation
with a letter addressing the alleged accretion of engines. It stated regulations are designed to facilitate the efficient financing of
that the lessors assume that engines will not accede to aircraft. aircraft and engines. More precisely, these laws are aimed at
According to KLM, the international prevailing view in the streamlining the global acquisition and use of aircraft equipment.
aviation sector concurred in this respect. Moreover, KLM On the other hand, it is primarily the erroneous Dutch
declared that the title-shift theory would endanger the possibility interpretation of these rules that frustrates these transactions.
of leasing engines at the global level. Based on this pertinent The lower courts in the Netherlands concur with this view. While
information the court ruled that the prevailing opinion of the the Cape Town convention and Aircraft Equipment protocol
aviation finance industry clarified that engines are not decide that no accession of engines takes place, these
component parts of aircraft. It is stressed that until today the instruments have not yet been ratified by the Netherlands.
outcome of all the litigated engines disputes in the Kingdom has Considering the Supreme Courts view that international
been that no accession of engines occurs. regulations are tools to clarify legal uncertainties, regardless of
whether these treaties are in force or not, it is anticipated that the
Finally, the Handbook for Arrests in the Netherlands convention and protocol apply in this jurisdiction. They establish
(Beslagsyllabus), December 2009 is guidance for the Courts in that no title-transfer of engines occurs when they are connected
the Netherlands to create uniformity in arrest cases. It is to airframes.
published and approved by the combined Dutch Courts of First
Instance. Its primary goal is to provide the judges with a code of
best practice in regard to the requests for arrests including
aircraft and engines. In the legal practice the handbook is most
important. For instance, in a recent case the Procureur-Generaal
with the Supreme Court of the Netherlands explicitly referred in
his conclusion to the books reasoning. Even more significantly,
despite the persistent efforts of a strong supporter of the
accession theory to have the relevant paragraph of the
handbook changed, it still concludes that the separate arrest of
leased aircraft engines is permitted. Such an arrest does not fall
under the sphere of application of the Convention concerning
the precautionary attachment of aircraft (Rome convention,
1933). Moreover, the handbook explicitly refers to the above-
addressed engine ruling of the Court of Appeal in Den Bosch.

Patrick Honnebier (b.honnebier@gobiklaw.com) is of counsel for Gomez & Bikker, aviation law offices, in Amsterdam-Aruba. He is a lecturer in international aviation finance law with the
International Institute of Air and Space law at the University of Leiden and Senior VP legal, Hastings & Huang, traders of aviation and other fuel supplies, Singapore.

Engine list prices and lease rates 20th Oct 2009 / 11th Jan 2010
20 Oct 2009 11 Jan 2010 20 Oct 2009 11 Jan 2010 20 Oct 2009 11 Jan 2010
Type Engine Full-life value Full-life value Percentage Current half-life Current half-life Percentage Mkt lease Mkt lease Percentage
mkt value mkt value change rate rate change rate rate change
737-300 CFM56-3B1 $2.53m $2.33m -7.9% $1.00m $0.80m -20.0% $0.030m $0.030m 0.0%
737-400 CFM56-3B2 $2.73m $2.53m -7.3% $1.20m $1.00m -16.7% $0.033m $0.033m 0.0%
737-500 CFM56-3C1 $3.38m $3.08m -8.9% $1.80m $1.50m -16.7% $0.037m $0.037m 0.0%
A321-200 CFM56-5B3/P $8.33m $8.33m 0.0% $6.40m $6.40m 0.0% $0.080m $0.080m 0.0%
A319-100 CFM56-5B5/P $6.53m $6.53m 0.0% $4.70m $4.70m 0.0% $0.060m $0.060m 0.0%
A340-300 CFM56-5C4/P $7.89m $7.89m 0.0% $5.50m $5.50m 0.0% $0.068m $0.068m 0.0%
737-600 CFM56-7B22 $6.85m $6.85m 0.0% $5.05m $5.05m 0.0% $0.064m $0.064m 0.0%
737-700 CFM56-7B24 $7.45m $7.45m 0.0% $5.60m $5.60m 0.0% $0.067m $0.067m 0.0%
737-800 CFM56-7B26 $7.95m $7.95m 0.0% $6.05m $6.05m 0.0% $0.070m $0.070m 0.0%
737-900ER CFM56-7B27 $8.40m $8.40m 0.0% $6.50m $6.50m 0.0% $0.072m $0.072m 0.0%
CRJ-200 CF34-3B1 $2.63m $2.63m 0.0% $1.50m $1.50m 0.0% $0.025m $0.025m 0.0%
CRJ-700 CF34-8C1 $3.55m $3.55m 0.0% $2.20m $2.20m 0.0% $0.032m $0.032m 0.0%
E170 CF34-8E5 $3.94m $3.94m 0.0% $2.68m $2.68m 0.0% $0.035m $0.035m 0.0%
767-200ER CF6-80A2 $5.02m $5.02m 0.0% $2.00m $2.00m 0.0% n/a n/a
A300-600R CF6-80C2A5 $7.51m $7.51m 0.0% $4.25m $4.25m 0.0% n/a n/a
MD-11 CF6-80C2D1F $8.38m $8.38m 0.0% $5.00m $5.00m 0.0% $0.085m $0.085m 0.0%
A330-200 CF6-80E1A3 $13.77m $13.77m 0.0% $9.35m $9.35m 0.0% n/a n/a
777-300ER GE90-115B $25.02m $25.02m 0.0% $19.35m $19.35m 0.0% n/a $0.210m
A320-200 V2527-A5 $7.77m $7.77m 0.0% $5.70m $5.70m 0.0% $0.080m $0.080m 0.0%
MD-82 JT8D-217C $1.68m $1.58m -6.0% $0.70m $0.60m -14.3% $0.023m $0.023m 0.0%
B747-400 PW4056 $7.49m $7.49m 0.0% $4.15m $4.15m 0.0% $0.065m $0.065m 0.0%
767-300ER PW4060 $7.89m $7.89m 0.0% $4.55m $4.55m 0.0% $0.070m $0.070m 0.0%
A310-300 PW4152 $7.07m $7.07m 0.0% $3.30m $3.30m 0.0% $0.060m $0.060m 0.0%
757-200 RB211-535E4 $7.40m $7.40m 0.0% $4.00m $4.00m 0.0% $0.050m $0.050m 0.0%
Fokker 100 RB183 Tay 650-15 $2.53m $2.53m 0.0% $1.50m $1.50m 0.0% $0.026m $0.026m 0.0%
A340-600 Trent 556-61 $12.29m $12.29m 0.0% $7.59m $7.59m 0.0% $0.110m $0.110m 0.0%
A330-300 Trent 772B-60 $12.25m $12.85m 4.9% $7.40m $8.00m 8.1% $0.120m $0.120m 0.0%
777-200ER Trent 895 $18.56m $18.56m 0.0% $12.69m $12.69m 0.0% $0.155m $0.155m 0.0%
ERJ-145 ER AE3007-A1P $2.53m $2.53m 0.0% $1.50m $1.50m 0.0% $0.030m $0.030m 0.0%
717-200 BR715A $3.33m $3.33m 0.0% $2.00m $2.00m 0.0% $0.045m $0.045m 0.0%
Data supplied courtesy of Ascend Online Fleets / Ascend V1 database

Airline Fleet Management | 27


TRADING, LEASING & FINANCE Covered Bonds

THE BENEFITS OF
COVERED BONDS IN
THE AVIATION MARKET
After government bonds, the European covered bond market is now the second biggest bond market
in Europe, worth an estimated 1.7tn. Although seen as a relatively recent phenomenon, particularly
in the UK, covered bonds in fact originate from 18th century Germany where the Pfandbrief was
created from a decree by Frederick the Great of Prussia. From this beginning, covered bonds have
blossomed into a highly successful form of security that is being used in increasingly diverse ways
by a wide range of issuers. Rex Rosales and Simon Greer of Reed Smith seek to examine the benefits
of covered bonds and how they can be used successfully by an increasingly wide range of financial
institutions and investors, including those in the aviation market.

28| Airline Fleet Management


The first covered bond in the UK was
issued by HBOS Treasury Services in
July 2003. Since then many other
financial institutions including
Barclays, Lloyds TSB, HSBC, RBS
and Nationwide Building Society
have followed suit.

SO WHAT IS A COVERED BOND? IT IS DEFINED IN THE UKS


Regulated Covered Bonds Regulations 2008 (the Regulations)
as a bond in relation to which the claims attached to that bond
are guaranteed to be paid by an owner from an asset pool it
owns. Normally a covered bond will be a fixed interest bullet
bond whereby repayment is in one lump sum due at maturity.
Covered bonds are also full recourse debt securities, which is a
big advantage to investors and will be discussed in greater detail
below. Typically the owner will be a bank or other regulated
credit institution which will be fully secured over a pool of assets
usually comprising of mortgages and public sector loans. In terms
of the aviation market, the cover assets pool would include loan
debt secured by aircraft mortgages or, in more recent
developments, Export Credit Agency (ECA) -backed financings.
This presents an excellent opportunity for aircraft finance
institutions, particularly given the current state of the banking
markets, to re-finance existing arrangements. The potential of
this market was illustrated in March 2009 when Germany
introduced the Aircraft Pfandbrief, a new category of covered
bond in which there is expected to be a market of around 44bn
in the future. This model will no doubt become increasingly
popular in the aviation market and it has many benefits for both
the financier and the investor. In the current financial climate, it
is clear that re-financing and low-risk investments are in high
demand and covered bonds are an excellent instrument through
which to achieve both.

The internationalisation of covered bonds has led to legislative


problems and considerable debate as to how to regulate them.
Within the EU, the problem has been that individual nations had
developed their own legislation to regulate covered bonds and,
therefore, initiation to implement uniform EU legislation has
proved difficult. This is particularly true in the UK. The relevant EU
legislation is the UCITS directive (85/611/EC). This directive sets
out the five key characteristics of a covered bond:

1. The issuer is a credit institution which has its registered office


in an EU member state.
2. Sums deriving from the issue are invested in conformity with
the national covered bond legislation in specified eligible
assets.
3. For the life of the bonds, the eligible assets are capable of
covering claims in respect of the bonds.
4. In the event of the failure of the issuer, bondholders have a
priority claim in respect of the eligible assets.
5. The issuance of covered bonds is subject by law to special
public supervision designed to protect bondholders.

Airline Fleet Management | 29


therefore the cover pool assets are protected from any insolvency of
the issuer. The assets are acquired on arms length terms and
typically are mortgage loans or other eligible assets from the
originator. The assets must be sufficient to cover all amounts that
are due under the covered bonds and are subject to strict conditions
and criteria imposed by the FSA in relation to their substitution or
replacement. The SPV guarantees both the issuers principal and
interest payment obligations under the covered bonds. The
guarantee is a direct, unsubordinated and unconditional obligation
on the SPV and is callable on the default of the issuer to pay any
sums due under the covered bonds. The SPV then secures its
obligations under the guarantee by granting a deed of charge in
favour of a security trustee (acting for the benefit of the bond
holders) over its rights and interests in the cover pool assets. There
should be no discrepancy between the cashflows coming in from
the cover pool assets and the cashflows going out to the
bondholders. Therefore, the SPV will enter into hedging
arrangements to deal with differences in interest rates, timing of
payments and exchange rate fluctuation.

The European integrated structure differs from the UK


segregated structure, in that there is no need for an SPV the
issuer also holds the cover pool assets. Recent issuers include BNP
Paribas, ABN Amro, Natixis and Deutsche Bank. Under the
integrated structure a duly authorised credit institution not only
issues the bonds, but also directly acquires the assets to build up
the portfolio for the cover pool. The cover pool assets must be
sufficient to cover all sums due under the bonds and they are
separated from the issuers other assets automatically by the
operation of law. Commercially, this achieves the same effect as
the SPV in the segregated structure. The cover pool assets are
The fact that covered bonds give the investor full exclusive to the bondholders giving them a senior priority claim
recourse against the issuer and that they are regulated over these assets.

by the UCITS directive means that they are a BNP Paribas recently launched a covered bond programme which
comparatively safe and transparent investment and is of major significance to the aviation finance market. BNP
Paribas Public Sector SCF [socit de crdit foncier], (the SCF), a
therefore attractive to a broad range of investors. subsidiary of BNP Paribas, issued French law-governed covered
bonds known as Obligations Foncires (OFs). The OFs are

These are the fundamental provisions that EU states have had to


incorporate into their national laws in order to implement the
directive. However, the respective national laws have not ended
up equal and this has led to imbalance in the covered bond
market. The best example of this is the UK, where legislation has
struggled to implement the Directive and thus covered bonds
there have been treated differently from their counterparts in
other EU member states. In particular, UK covered bonds have
been treated differently with regard to exposure limits applicable
to regulated funds and for regulated capital purposes. This has led
certain investors to prefer European covered bonds over UK
covered bonds.

The first covered bond in the UK was issued by HBOS Treasury


Services in July 2003. Since then many other financial institutions
including Barclays, Lloyds TSB, HSBC, RBS and Nationwide Building
Society have followed suit. UK covered bonds have a particular
structure that differs from traditional covered bonds and is known
as the segregated structure. In the UK segregated structure an
FSA authorised credit institution (normally a bank or a building
society) issues the covered bond, which is a direct, unsecured and
unconditional obligation of the issuer. The issuer then immediately
lends the proceeds of the covered bond issue under an
intercompany loan to a Special Purpose Vehicle (SPV) that is on its
balance sheet. The SPV then uses the intercompany loan to acquire
the assets which form the cover pool to the bond. The SPV is
incorporated as an English limited liability partnership (LLP) and

30| Airline Fleet Management


notable as being the first covered bonds to include sovereign-
backed assets in the cover pool.

In terms of structure, as already stated, the cover pool consists of UK covered bonds have a particular structure that
sovereign-backed assets with potential to add public sector loans differs from traditional covered bonds and is known as
in the future. BNP Paribas may only substitute these assets provided
the value of the cover pool remains at least equal to what it was the segregated structure an FSA authorised credit
before the substitution. An example of a typical OF cover pool institution (normally a bank or a building society)
asset would be aircraft finance loans which are guaranteed by
ECAs (including European and Ex-Im), being direct obligations of issues the covered bond, which is a direct, unsecured
the relevant sovereign. The loans are assigned to the SCF by way and unconditional obligation of the issuer.
of a bordereau [printed form that the parties fill out specifying the
details and figures of all the loans assigned to the SCF] signed by
the parties and, from the date of signing the bordereau, the
full recourse claim to the issuers unsecured assets. The ring-
transfer is binding on third parties.
fencing of the issuers assets ensures that they are protected from
the insolvency of the issuer and also that the investor in the bond
BNP Paribas is the servicer of the OFs and responsible for all
will have priority to these assets. But further to this, should the
communications and dealings in relation to the rights and
cover pool assets be insufficient to satisfy the claims of all the
powers of the issuer under the relevant eligible assets, the
bondholders, the investor has a direct, unconditional contractual
guarantors for the related guarantees and relevant debtors in
claim to the assets of the issuer. This double protection makes
relation to the eligible assets. The OFs may be issued in different
covered bonds a particularly safe investment. In fact since the very
currencies and may give full redemption at final maturity or full
first Pfandbrief right through to todays covered bonds, there
redemption at an extended maturity. With regard to over-
has never been a default by any issuer of a covered bond.
collateralisation, the OFs have a healthy level of 149 per cent,
which further illustrates the credit strength of this bond. This
Another key benefit of covered bonds is that they have a higher
level is to be checked quarterly by the specific controller to ensure
yield than government bonds yet still maintain a very low risk
that the SCFs total assets are greater than the debt due under
profile. Regulated covered bonds pay higher rates of interest than
the OF. In addition to over-collateralisation, further comfort is
government gilts without increasing the risk to the investor. This
derived from French legislation which provides that the holders of
makes them particularly attractive to conservative investors who
the OFs will have priority over the SCFs assets upon its insolvency
wish to increase investment yields yet are unwilling to alter the risk
due to the privilege granted to the bonds.
profile of their investment portfolio. In this way covered bonds give
another benefit as they allow conservative investors, who are
The BNP Paribas programme attracted an AAA (or equivalent)
normally restricted to investing in government bonds, to diversify
rating from all three rating agencies which is not uncommon for
their portfolios yet maintain the high credit quality of their
covered bond issues. They are typically regarded as safe
investments.
investments, not dissimilar to government bonds. In essence, the
credit rating is based principally on the quality of the cover pool
assets rather than on the corporate rating of the issuers. This is
useful for financiers who may not have a strong credit rating
themselves. A high quality asset pool (resulting from strict over-
collateralisation requirements and eligibility criteria) gives the
covered bond a high credit rating, thus enabling these financiers
to attract investors they previously would have been unable to
target. In the present climate, aviation financiers looking to raise
capital should realise that investments with high credit ratings
that are low risk, yet have a relatively high yield, are in very high
demand from investors and thus covered bonds present a great
opportunity to tap into a growing market.

Another advantage to the issuer is that comparatively, regulated


covered bonds are cheaper to issue than unregulated covered We should also mention liquidity as a further benefit to investors.
bonds and other forms of asset-backed securities. This low cost of Regulated covered bonds and the cover pool assets behind them
funds is due to regulated covered bonds having lower risk, are easily tradable and there are markets for them due to their
stringent regulatory supervision and high liquidity. In addition, high credit ratings and low risk.
covered bonds enable issuers to attract a wide and diverse range
of investors. The fact that covered bonds give the investor full Overall, covered bonds often offer distinct advantages for both
recourse against the issuer and that they are regulated by the the issuer and the investor. It is clear that there is an important
UCITS directive means that they are a comparatively safe and market for this high yield to low risk investment and the signs are
transparent investment and therefore attractive to a broad range that it is only going to grow further. In a climate where there is
of investors. both a prevalence of ECA-supported transactions and tight
controls on the use of bank balance sheets, the ability for aircraft
From an investors point of view, covered bonds also have many finance banks to bundle up their government guaranteed
advantages. Perhaps the most significant benefit of covered bonds transactions and issue covered bonds backed by these
is the dual-protection that they offer to the investor. This dual- transactions presents an ideal opportunity to raise capital for
protection means that investors in covered bonds have full further aviation transactions. Hopefully this should assist in
recourse to the issuer, in that they are not only covered by the easing the near-term funding gap that industry experts have
issuers ring-fenced assets behind the bond, but they also have a been predicting for new aircraft deliveries.

Airline Fleet Management | 31


TRADING, LEASING & FINANCE Engine Management

32| Airline Fleet Management


The administration of warranties and guarantees is a complex
matter which is often beyond the capabilities of smaller airline
operators. Harish Shah of Aviation Warranty Solutions looks
at some of the main considerations when managing such
agreements and making the associated claims.

WARRANTY AND
GUARANTEE
CONSIDERATIONS
THE WORLDS AIRLINES ARE UNDER SIGNIFICANT PRESSURE TO
increase profitability and with operator margins becoming
tighter, one of the best means of improving the bottom line is
through tightening financial controls and reducing costs. With
maintenance accounting for as much as 20 per cent of an
airlines direct operating costs, this is one area in which airlines
have the ability to exert cost control. As a result, operators are
being challenged to increase their overall maintenance efficiency.
Efficiencies can be gained in many areas including: the
decreasing of overall maintenance costs; the streamlining of
the supply chain; the minimisation of unscheduled maintenance
and the optimisation of scheduled maintenance; ensuring
regulatory compliance and tightening accountability of technical
operations; focusing on strengths by outsourcing and/or in-
sourcing maintenance activities; and ensuring continued safe
and efficient operations. One of the primary problems airline
organisations face when attempting to achieve these efficiencies
is a limitation in the provision of the required skilled resources.

Warranties and guarantees


One area in which airlines can reduce the costs of unscheduled
maintenance and modification programmes is by taking maxi-
mum advantage of manufacturer warranties and guarantees.
These are offered and negotiated when purchasing modern
aircraft and engines and they enable monetary recovery through
warranty claims that can account for many millions of dollars
each year.

It is generally acknowledged that many operators and MROs


have efficient warranty recovery departments actively recovering
costs through warranty claims, where other operators do not
give this area the attention it deserves. By ensuring that staff are
adequately skilled and technically knowledgeable, claims can
be made for: potential unscheduled maintenance activities;
modification programmes; free-of-charge (FOC) modification kits
and materials; transportation cost recovery; and the labour
required for removal and refitting components. This can be
resolved at no cost by claiming through warranty channels or by
initiating negotiations with the manufacturers. In the absence of
adequate skills and knowledge, many claims are not made,
leading to a situation where operators do not collect their
contractual rights.

Airline Fleet Management | 33


Demands on the manufacturers do not end with the delivery
PRIMARY CONTRACTUAL DOCUMENTS of the finished product since they have an interest in their
products throughout the entire life cycle. Specifically, original
equipment manufacturers (OEMs) are challenged to: provide
responsive customer service and ongoing product support;
monitor the performance and reliability of their aircraft, engines
Purchase or components in the field; revise troubleshooting procedures
agreement (GTA) and possibly even re-design their equipment based on this in-
field experience. In addition, they should determine the root
Detailed causes of any unanticipated failures; resolve those problems as
specification Warranty quickly and cost-effectively as possible; and continuously improve
provisions the performance and reliability of their products.
Product assurance
document These activities allow aerospace manufacturers to keep their
customers happy and enable them to sell parts and services time
Customer support
and time again. Most of the associated sales brochures and
document
presentations will only provide a brief explanation of the
warranty programmes and the terms offered. Usually it is the
Customer service airlines senior purchasing staff that become privy to the detailed
general terms terms and conditions associated with part or service acquisition.
agreement Their decision to purchase is based on price, availability, lead
times, warranties, guaranties, FOC spares package, discounts and
so on.

However, there are also many OEMs which actively encourage


Processing warranty claims warranty recovery and they will often work together with an
The processing of warranty claims is not as straightforward as it operator, sharing information in order to enable them to gain a
might appear. Firstly, it is necessary to understand where to look competitive advantage. This is done by effectively lowering the
for the warranty terms and agreements that have been neg- costs of ownership and increasing customer satisfaction by
otiated or offered when purchasing goods or services. These can proactively offering up-front warranty programmes and
be found in a number of documents as shown above. implementing their own warranty recovery processes.

Additional warranty information may be found in the following Such companies will usually visit the customers warranty
documents: side letters to the purchase agreement; delivery departments on a regular basis and sometimes provide useful
exception and commitment letters; service bulletins and service training on a FOC basis. Such practices are tending to be
letters; programme letters; and campaign changes. curtailed in the current economic downturn and are now being
enacted on a reactive rather than proactive basis.
It is important when making purchases of new or used engines
and parts that one is aware of the terms and conditions of the Unfortunately, when a purchase has been agreed, the associated
warranties and guarantees offered as standard and to negotiate purchase agreement is not necessarily passed-on to the depart-
enhanced conditions. It is also important to make administration ments who are supposed to manage such contracts on an
clauses clear and thereby simplify the warranty claim process ongoing basis. Such departments are set-up to maximise supplier
when a component fails. One should not simply concentrate on performance and ensure that the available warranties and
obtaining the best purchase price, as is often the case. guarantees fully utilised. The non-availability of contracts makes
Ultimately, strong warranty administration results in reduced this impossible.
costs and helps the end user to achieve its most important goal
happy shareholders. Over time, maintenance programmes will change as new
alternate parts are approved and fault modes emerge requiring
During the negotiation of a spare part purchase or services additional inspections or maintenance work. Sometimes,
agreement, it is important to: ensure warranty terms are clear modifications are offered by service bulletins (SBs) and other
with set time limits and conditions for acceptance of claims means to their customers.
and closure of the items; make sure that if claims are not
responded to within the set time, that the claim is deemed
accepted; ensure that the transfer of warranty rights must be in
place within a certain timeframe and acknowledged by the
manufacturer/ repair shop; have permission and full author-
ity to negotiate all warranty/guarantee matters with the
manufacturers and vendors.

Manufacturers perspective
Aircraft, engine and component manufacturers are facing
growing competition in the marketplace and the challenge they
have is to distinguish themselves from industry rivals by providing
superior service and lowering the costs of ownership of their
products. Furthermore, in an effort to expand their businesses,
many manufacturers have extended the scope of their services,
offering enhanced warranties in order to sell their products.

34| Airline Fleet Management


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Furthermore, by ensuring the efficient use of the available
product assurance guarantees it is possible to reduce inventories
that are often significantly larger than necessary due to the
When warranty claims are difficulty of accurately predicting parts requirements and
made, this reduces the identifying obsolete parts.

costs associated with Therefore by effectively understanding and controlling warranties


unscheduled maintenance and guarantees it is possible to:
Reduce maintenance costs and overheads since all costs
activities and unexpected associated through design deficiencies, material and work-
in-service component manship errors are pursued and recovered from manufacturers
and vendors.
failures. Reduce component repair and overhaul costs since all costs
associated with warranty-repaired items are recovered through
efficient administration of product support agreements.
Reduce modification and upgrade costs by ensuring all FOC
service bulletins kits, upgrade programmes and chargeable
All of these activities generate additional maintenance costs and modifications are negotiated with the vendors for price
many operators simply accept these and happily pay for them reductions.
without challenging the costs or the need for the modifications.
Nature of warranty
When challenged, most OEMs will reduce the costs incurred, Each warranted part shall be free from defects: in material; in
providing FOC parts and labour, or agree to reimburse the costs workmanship; in design, having regard to the state-of-the-art at
through warranty claims. On occasions they take the latter the date of the design; arising from the failure to conform to the
course of action, knowing full well that the warranty claims will specifications. However, standard warranty does not apply to: per-
never be made since they do not inform their own warranty and formance estimates, approximations or design aims; all standard
commercial departments, thereby making it difficult for the parts, all consumable material, including raw or bulk materials
operators to recover these costs.
Engine warranties
When warranty claims are made, this reduces the costs Engine manufacturers normally provide new parts warranty for
associated with unscheduled maintenance activities and between 12 to 18 months with a time limitation between 1,000
unexpected in-service component failures. In an equal and and 4,000 flight hours. Remedies usually cover the cost of the
opposite manner, inefficient use of in-house warranty recovery failed part or FOC repair, but not the removal and refit labour
resources results in excess cost and decreased success rate of or the associated transportation, unless negotiated prior to
monetary recovery. purchase.

36| Airline Fleet Management


They also provide comprehensive performance guarantees Free of charge (FOC) classification together with industry
spanning over several years that provide protection for an support: OEMs taking direct responsibility in the case of a
operators fleet of engines normally covering: unscheduled production error or design defect. Service bulletins issued to
engine shop visit rates; in-flight shut downs; engine surges; correct design defects becoming apparent within the warranty
excessive fuel burn; engine-caused delays; and remote site period and items that are clearly unsuitable in operation (not fit
engine removals. Performance guarantee remedies are normally for their intended use) are the main candidates for this
in the form of cash compensation providing the reporting terms classification. There is no relationship between FOC statement
contained within the contract have been met. and the mandatory modification classification.

Engine repair shops typically provide warranty terms that are valid In order to process warranty claims: ensure that the spares
for 18 months from delivery and 12 months from installation and purchasing agreements and component repair records are
between 1,000 hrs and 3,000 flight hours of operation. They do available to the warranty administration within your organ-
not normally provide performance guarantees that protect an isation; ensure that they have access to technical documents
operators fleet of engines. Remedies typically cover associated and/or on-line sites; provide access to third-party maintenance
transportation costs and the costs of rectification. The labour costs organisations who maintain your fleet if work is not accomp-
of removing and replacing failed parts is not normally covered. lished in-house; if the administration of warranty is contracted
out, ensure that the MRO/agent reports credit and claims status
Components and spare parts on a regular basis, and conduct regular audits to ensure the
Coverage is normally provided by means of preliminary efficiency of claims submitted by them.
negotiations with each vendor/supplier. The terms of the
contract are specified in a variety of ways including: on the To ensure timely processing of claims you must have the
reverse of the purchase order/invoice; for second-hand or used following information available: the part number and serial
parts, warranty terms are fragmented with no industry-set number of the part; the part number and serial number of the
conditions in place; it is unclear what warranty terms are offered engine to which the part was fitted; the date the part was fitted
or the administration conditions for the failed parts not and hours/cycles since fitment; the date the part was purchased,
purchased directly from the OEM. the order number and invoice; details of the relevant warranty
clause contained within the purchase agreement; and the
PMA parts warranty and guarantees are also unclear and normally availability of the part if it is expendable.
the failure of these parts will negate all other existing engine
warranties. The use of such parts is not usually permitted within In some cases the condition of damaged parts needs to be
leased engines unless they are OEM-approved and authorised. confirmed by the suppliers or OEM representatives prior to
scrapping them. Furthermore, it is necessary to submit the claim
Life-limited parts within the time period defined in the agreement and ensure that
The warranty for the major life-limited parts are normally the claim is followed up on a regular basis until it has been
contained within the new engine purchase agreements and successfully concluded.
primary parts such as specified discs, drums, spacers, air seals
and shafts. A declared life limit applies to life-limited parts (eg
20,000 hrs or 15,000 cycles). Remedies include pro-rata parts
and labour credits for repair and replacement, inclusive of the
cost of expendables and transportation of the part.

Repetitive failures
Unlike airframe parts that contain guarantees based on mean
time between repair (MTBR) and component reliability
programmes defined by the manufacturers, engine components
do have such programmes/guarantees in place. Instead, it is
necessary to rely on an engine monitoring team to identify
trends and to set the reliability status of engine parts, and to alert
warranty administration if a part is continually failing within a set
in-service period in order to post the intention to claim whilst the
engineering department identifies the cause of the problem,
often in liaison with the OEM. This will enable the warranty
department to recover the actual costs incurred.

Warranty conditions
Administrative time limits typically apply to the submission of a
warranty claim submission (typically, 60 to 90 days is acceptable).
A claim determination period of up to 30 days is typically
allowed for claim settlement, although operators should retain Conclusions
parts for a minimum of 60 days to permit possible inspection. By effective use and management of the warranties and guarantees that are available when
purchasing new and used engines, spare parts and services, it is possible to ensure that full
In the case of aircraft on ground (AOG) situations, warranty value is obtained during the service life of a product. It in important that the staff who are
settlement cannot be made available as an on-the-spot remedy tasked with managing the life-cycle of the product are sufficiently trained and have the
is in contradiction to the spirit of the warranty procedures. necessary tools to administer the warranty recovery process, providing ongoing training as
Therefore no AOG situations are delivered FOC and instead a required.
warranty claim should be filed after the fact and within the
specified time limits. Harish Shah is available at email address info@aviationwarranty.com

Airline Fleet Management | 37


AFM INTERVIEW Jet Airways

Jet Airways has taken advantage of Indias strong economic


trajectory to become the leading domestic carrier. Of
course, it has not been immune to the recession, with yields
declining in the second half of 2009. Daniella Horwitz spoke
to Raja Segran, Jet Airways SVP Europe and the UK, about
how the airline has adapted to adversity and expects not
only recovery, but increased demand in the next six months.

Raja Segran, SVP Jet Airways, Europe & UK.

It is not just Indias enormous population that contributes to the


countrys power potential. The emergence of a dominant middle
class (about 300 million) and the fact that as much as 70 per cent
of the population is under 35-years-old means there is a huge
reservoir of mobile, aspirant passengers.

Indias aviation boom has its origins in the rapid liberalisation of


the 1990s. This meant low entry barriers for airlines, resulting in
an explosive growth in private airlines and low-fare airlines (the
elements for low-cost do not exist in India). Jet Airways was one
of the carriers quick to take advantage of the newly liberalised
market and increased air travel demand in 1993 it began
operations with a fleet of just two aircraft. Naresh Goyal, one of
Indias most prominent entrepreneurs, Jets chairman and
majority stakeholder, took the bold step of starting the airline,
something he had always dreamed about and wanted to do.

AFM INTERVIEW: Positive market conditions and steady management led to Jets
steady growth it now operates 88 aircraft and holds the lions
share of the domestic market. Jets only serious competitor, Air

RAJA SEGRAN, India, has the largest market share in terms of international

SVP JET AIRWAYS


EUROPE &
UNITED KINGDOM
EACH YEAR INDIA EXPERIENCES A GROWTH OF 6.5 TO 7.5 PER
cent, tipped for a 9 per cent growth over the next two years. In
Gordon Browns pre-budget speech [in December 2009] he was
talking about a shrinkage of the British economy of up to 4.5 per
cent, so really, you are talking about an Indian growth rate at
least 10 percentage points ahead of the UK economy. And that
makes India a country to be reckoned with, says Raja Segran, Jet
Airways SVP Europe and the UK.

Despite current global issues, the Indian economy is still growing,


albeit a little slower than it used to. Segran says that from the
financial year 2003 to 2008, the countrys domestic traffic grew
27 per cent. For the same period Indias international traffic grew
18 per cent. Combining the two figures gave a base of 26 million
passengers in 2003, with a corresponding 74 million in 2008.

38| Airline Fleet Management


travel. This is hardly surprising as the flag carrier has a long reshaped it and improved it, so it is now on its own strength a
history of international travel, whereas Jet only began formidable player in the low-fare environment. It is its own legal
international operations in 2004 after Indian government rules entity and we are keeping the two brands separate, because it
allowed it to do so. has its own identity, routes and loyal customers.

Jet Airways has a European hub in Brussels, serving Toronto, JFK In May 2009 Jet Airways cut capacity from its full service fleet and
and Newark from the Indian points of Chennai, Mumbai and converted these aircraft into a high-density single-class product
Delhi. In November 2009 it scooped an award for best long-haul called Jet Airways Konnect. Initial results suggest that it was the
airline from Brussels. Every day we have six aircraft criss-crossing right decision. Segran confirms: We have regained market share
Brussels between the hours of eight and 10 in the morning, and our operating economics have improved, because we can
explains Segran. We are now a familiar feature in the Belgian offer the number of seats that the market requires. Yields have
market. We have reached prominence not just as an airline with dropped per passenger, but per aircraft turnaround, we are
very strong market share to India, but also with an increasing gaining a lot more revenue than we did previously.
international presence. In October 2009 our UK operations
experienced the best ever month for departures and we are September slowdown
enjoying a growing market share in North America. Jet plans Towards the end of last year, the recession, reduced demand
to increase this market share by implementing codeshare and lower yields dented Jet Airways earnings. In September 2009
agreements with American partners such as United and Jet Airways reported a loss before tax of Rs.4, 067m ($ 84.5m)
American Airlines. for the quarter, compared to Rs. 5,785m ($123m) in the year-ago
period. Segran attributes the low yields in the September quarter
Tough competition to heavy price competition in the recessionary environment. The
On the domestic front, competition between low-fare carriers in five-day pilot strike which cost the company an estimated $16m
India is fierce with cut-throat prices attempting to lure passengers contributed to the quarters loss.
away from trains and into the air. In the late noughties, Jet
Airways with its traditional two-class (economy and business) However, the carrier appears to have clawed back most of the
product was losing out to the plethora of low-fare competitors. lost ground; improving its operations in terms of revenue
So it adopted strategies to wrest back market share, in the form generation and cost management. Jet reported a surge in
of Jetlite and Jet Airways Konnect. In April 2007 Jet Airways passenger traffic for November 2009 33 per cent on a year-on-
bought Delhi-based Air Sahara for $340m, renamed it JetLite and year basis. Traffic from its international operations, grew by 19
repositioned it as a low-fare carrier. Segran says: We renamed it, per cent on a seat factor of 81.9 per cent in the same period.

Airline Fleet Management|39


recover some of the costs. There have also been rather ambitious
attempts to privatise areas such as ground handling within
airports, and this of course comes at a cost to operating airlines.
Segran explains: Airlines do their own ground handling in order
to manage costs. If they were compelled to outsource it, it would
also become a high input cost.

Priorities for 2010


In 2010 Jet Airways intends to consolidate its business
stabilising operations and building on its foundations. Segran
says: We have matched capacity to current and expected
demand. The loads are building up nicely because in the
international arena we have built up awareness and brand
recognition Our next challenge is to build up the strength in
The contribution of international revenue to total revenue was 62 the yields. We also plan to build up the front end in our first
per cent compared to 53 per cent the previous year. The load and premire class cabins.
factor for the last quarter was 81 per cent on international routes
compared to 66 per cent the previous year. Jet Airways will be expanding its Middle East route network with
a daily flight to Doha, Qatar, from the Indian capital, Delhi,
Stronger load factors are a result of Jet Airways matching capacity onboard a 737-800. Effective from January 21, 2010, the daily
to demand and downsizing the aircraft on several routes, service from Delhi comes in addition to daily flights from Mumbai
especially those to North America. It originally operated a mix of and Kochi. The flight is being introduced to meet growing
777s and A330s on the North American routes but for the last customer demand for a direct service and further augments Jet
quarter it has been an all-A330 fleet. Operating economics have Airways growing Middle East offering. In July and August 2009
been improved through rationalising of routes. We have pulled Jet Airways launched inaugural flights from Mumbai to Jeddah
out of some of our loss-making routes that we operated in 2008. and Riyadh in Saudi Arabia. Jet Airways now flies to eight cities
Foremost was the Bombay-Shanghai-San Francisco service, which in the Gulf, including Kuwait, Bahrain, Muscat, Doha, Dubai,
we unfortunately entered into the market when everything was Abu Dhabi, Jeddah and Riyadh.
collapsing, so we pulled out, recalls Segran. Jet also leased out
some surplus aircraft, taking away excess capacity and providing Other than the Middle East addition, Jet Airways will not have a
welcome leasing capital. vastly different route size or schedule in 2010, because it believes
it has the optimum fleet now to service current and future routes.
Jet has been keeping a keen eye on costs, but Segran is adamant The fleet size will remain the same at 88 aircraft. The largest
the passenger will not be able to see any stinting or stinginess portion is the domestic fleet; comprising 52 737NGs (-700/-
in terms of quality of the product offered. He sees the staff as a 800/-900) and 14 ATR 72-500s. The long-haul fleet comprises
great asset to the airline and the main reason why it won the 22 aircraft, 12 A330-300s and 10 777-300ERs. We have been
international award. In this business, the hardware is the same, constantly renewing and rejuvenating our fleet and we have an
we all have the same aluminum tubes, similar seats from the average age of 4.5 years. That must be one of the most modern
same manufacturers, the same distribution. What separates fleets, especially in an airline of this size, in business today,
airlines is really the quality of their staff. We are a young airline notes Segran.
with youthful, energetic and loyal employees whose devotion to
duty is undimmed during this difficult time. Our staff are now Jet Airways outlook for 2010 is optimistic. We already think
rallying together because they know what will keep customers things are looking better says Segran. It is expected that
loyal is the quality of their service. demand to India will increase due to its status as a leisure
destination and business hub. Outward-bound travel will also
Indian aviation increase because of the growing middle class, improved
Despite strong growth, the Indian aviation market is not without economies and increased disposable income. Segran forecasts
its challenges; India takes a disproportionate share of overall patchy growth in the coming year with different parts of the
industry loses. This is largely due to an imbalance of supply and world recovering at different rates. I am confident that India
demand a surfeit of low-fare carriers has resulted in excess and the Far East will outstrip growth in the rest of the world. And
capacity. Segran explains: We believe there is as much as 25 to it will probably be the engine for growth, at least in that region.
30 per cent excess capacity in the domestic market in India. Jet expects to continue its consolidation; strengthening its
Because of empty seats, prices are well below cost, resulting in balance sheet in the coming year. Segran concludes: With
uneconomic operations. If this excessive capacity is not improved operating performance, continued brand recognition
managed and brought down to match demand it could force the and the quality-driven business that we are building up, we will
closure of some airlines. Segran says this has to be tackled grow further in 2010 we have trimmed our costs, when the
sensibly. One scenario is consolidation. The other is pulling out winds start to blow, our sails will be ready.
some of the capacity so that you are able to come back to
rational and reasonable pricing.

Another thorny issue is aviation fuel. This is very heavily taxed;


fuel prices are often 20 to 30 per cent higher than those in the
competitive, liberalised and untaxed markets. And because
aviation fuel is a large part of operating costs, for many Indian
carriers it is 35 to 45 per cent of input costs. In addition, because
of the investment required to build many of Indias newly
privatised airports, airlines and passengers are being taxed to

40| Airline Fleet Management


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global passenger network carriers, but now a plethora of
low-cost carriers and short-haul networks are providing
stiff competition. The region is a burgeoning aviation hub -
in terms of jet powered aircraft fleets, APAC is third behind
the US and Europe. Daniella Horwitz looks at the growing
fleet and its maintenance operations.

EASTERN
PROMISE
ASIA-PACIFIC
COMES OF AGE
THE EMERGENCE OF A LARGE MIDDLE CLASS, INCREASING
regional co-operation and progressive air deregulation are
making the broad geographical region of the Asia-Pacific (APAC)
the fastest growing in terms of air traffic. The aviation boom can
also be attributed to the regions steady economic development;
an increase in GDP stimulates trade and air traffic growth.
Nathan Smith, industry analyst, aerospace and defence at Frost
& Sullivan (F&S), a global market intelligence and consultancy
company, predicts that economic growth in the region will
average 4.6 per cent over the next 10 years, whereas China
alone will average 7.2 per cent and India 7.9 per cent. In 10
years, the forecast for APAC is a 28 per cent share of global GDP,
and will account for almost 36 per cent of worldwide travel.

Today about 3,000 commercial aircraft operate in the region;


F&S forecasts the fleet will grow to an estimated 3,700 aircraft
by 2014 and approximately 4,700 aircraft by 2019 or a
compound annual growth rate (CAGR) of 4.6 per cent over the
next 10 years. China will account for the largest percentage of
this growth. The estimate for Chinas fleet is 1,275 commercial
aircraft, and this number is likely to grow at a rate of 7.8 per cent
over the next 10 years. The forecast for available seat miles
(ASM) in the region is a CAGR of 6.2 per cent over a 10-year
period in comparison to 2.6 per cent in North America.

Economic growth in the Asia-Pacific is expected to grow faster


than the rest of the world as a result of increased trade and a rise
in the demand for air travel for leisure and business. This is
further fuelled by cheaper airfares thanks to increased airline
competition and the rise of low-cost carriers (LCCs) says Tay
Kok Khiang, president of ST Aerospace, one of the leading MROs
in the region. He adds that Airbus data suggests the regions
LCC growth is greater than anywhere else in the world, while
Boeings data indicates that APACs demand for aircraft over the
next two decades will be the highest.

42| Airline Fleet Management


Airline Fleet Management | 43
Combined aircraft MRO market size
Boeings forecast for the Asia-Pacific is that long-term annual air
(APAC, China & India), 2009 2019 traffic growth will be 6.9 per cent over the next 20 years. Travel
volumes in Asia-Pacific overall are large and growing rapidly,
12.0
says Randy Tinseth, Boeing Commercial Airplanes VP of
Spending ($ Bn)

10.0 Marketing, Asia-Pacific will account for 41 per cent of travel in


20 years time, up from around 32 per cent today. In fact, in less
8.0 than 10 years, Asia-Pacific will easily be the largest air travel
market in the world.
6.0
4.0 The countries on the crest of the aviation wave are India and
China with their growing economies and large mobile
2.0 populations. Tay of ST Aerospace believes these countries have
0 huge economic potential and notes that the relaxation of
regulatory restrictions and government investment in airport
2009 2014 2019 infrastructure have been important stimuli. Smith of F&S says
China and India are forecast to have the fastest growing
APAC China India economies of all regions. He adds: To meet this growth, aviation
in China and India will need to grow to twice its current size.
2009 2014 2019 India has one of the fastest growing aviation industries, it ranks
in the top 10 for global aviation markets, with its civil aviation
APAC 7,427,990,621 9,494,246,370 12,055,019,921 sector growing 17 per cent in 2008.
China 2,344,439,647 3,850,017,714 5,856,083,553
India 714,644,791 1,085,322,408 1,612,548,000 LCCs gain market share
Note: All figures are rounded, the base year is 2009. Source: Frost and Sullivan APAC is served by a variety of airline types including network
carriers, LCCs, regional and emerging airlines, as well as cargo
According to the Airbus Global Market Forecast 2009-2028, operators. Network regional carriers dominate the market and
APAC, with its growing emerging markets, is expected to take over the next 20 years they are expected to operate more than
the biggest share of aircraft deliveries. Over 30 operators half of the regions fleet. Their prominence is due to their global
generated 19 per cent more traffic in 2008 than in 2007, with presence, network alliances, low-cost affiliations, and the
the top five carriers accounting for 68 per cent of that growth. demand for international trade and travel. However, LCCs are
Although the regions fleet is currently around 20 per cent of the catching up this segment is the fastest growing throughout
world fleet, Airbus expects demand for 7,672 new aircraft Asia. The fleet size of many LCCs may be small, but they are
(valued at $1.1tn), continuing to represent up to 31 per cent of expanding and gaining market share. We expect the growth
the total world demand over the next 20 years for aircraft rate over the next 10 years to average 4.95 per cent based on
over a hundred seats (see graphic below). New passenger aircraft current fleet size, aircraft orders and passenger growth in the
deliveries are expected to be dominated by aircraft over 100 seats region, declares Smith of F&S. According to the Centre for Asia
(nearly 90 per cent). From these, over 40 per cent or some 3,100 Pacific Aviation (CAPA), LCCs have been, and are likely to
aircraft will be twin-aisle types and very large aircraft (such as the continue, leading aviation growth in the Asia-Pacific. Data shows
A380).This is due to the huge population centers in Asia and that over the last nine years the percentage of penetration for
significant distances between them and other parts of the world. LCCs has grown to about 16 per cent.

Source: Airbus

Total new deliveries by region


Europe CIS
% of world % of world
2009-2018 2019-2028 deliveries 2008-2018 2019-2028 deliveries
2,876 3,192 25% 454 447 4%
North America
% of world Middle East
2009-2018 2019-2028 deliveries % of world
2,993 2,458 23% 2009-2018 2019-2028 deliveries
730 689 6%
Africa
Latin America % of world
2009-2018 2019-2028 deliveries
% of world Asia-Pacific
2009-2018 2019-2028 deliveries 474 455 4%
% of world
2009-2018 2019-2028 deliveries
892 766 7%
3,723 3,949 31%

Passenger aircraft>100 seats (excluding freighters)

44| Airline Fleet Management


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Europe, Middle East, Africa Americas Asia Pacific
U.S.: 1-888-589-6340
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outside the U.S.: 1-630-515-5305
customers@oagaviation.com custcare@oagaviation.com customers.aspac@oagaviation.com

www.oagaviation.com
Significant growth maintained in Asia-Pacific
CIS
8.1% RPKs growth: annual average 2009-2018
Europe
North America
5.2%
5.5%
Middle East Asia-Pacific
6.1%
7.2%
Africa
8.6%
Latin America
5.9%

Asia-Pacific World
20-year 20-year
2009-2018 2019-2028 growth 2009-2018 2019-2028 growth
6.4% 5.5% 5.9% 4.6% 4.8% 4.7%

Source: Airbus

In addition, there are opportunities for LCC markets to become unfavorable regulatory issues that exist, and the country is in its
even more widespread, with potential for new operations and infancy for MRO. Singapore is a favorite choice for capital-intensive
even some new operators in parts of Asia where LCCs are not MRO activities and service parts distribution. Overall, Asias labour
well established. Airbus says deliveries to APAC are expected to rates are lower than all regions except Africa, Latin America and
increase with the growing low-cost presence and demand from the Caribbean, and the quality of work is exceptional. The vast
emerging markets stimulated by progressive deregulation. Asia- majority of MRO spending in the region will be for widebody
Pacific LCCs are expected to develop their single-aisle fleets aircraft, F&S has forecast $12bn spend by 2019 for both
quickly from a relatively low base of 340 today to more than widebody and narrowbody aircraft. (The forecast for widebody
1,470 by 2028. and narrowbody spending in 2009 was $7bn). Shown in the chart
on the top of page 44 is the total MRO market size for APAC.

MRO investment LCCs typically outsource as much maintenance as possible to


The Asia-Pacific region is seen as a MRO hub that provides quality reduce their capital investments and improve their operational
repair at reasonable cost. The man-hour costs in Europe can be efficiency. Tay of ST Aerospace insists that outsourcing of aircraft
double those of APAC, while the US rate is about 1.5 times higher. maintenance is not driven by cheap labour sources: On the
Thus it is to be expected that a wealth of airframe heavy main- contrary, outsourcing of maintenance will allow airlines to reduce
tenance is outsourced to the region from the US and Europe. their capital outlay and investment in assets, which is one way
Many MROs and OEMs are investing in the region because of the that airlines can keep operational costs low. By doing so, they can
growing economic potential. Smith of F&S expands: OEMs are also channel their resources to focus on their key operations
investing in China for market access, affordable labour, to without having to build up the capabilities and labour to
minimise tariffs and customs, as well as be close to their customers maintain their aircraft. He adds that the pursuit of rapid growth
in the region. Indias MROs and training offer high investment will demand outsourcing and believes that the outsourcing trend
potential and the advantage of low labour costs, but there are still will continue to be strong.

New passenger aircraft deliveries by region


Latin
Africa Asia-Pacific CIS Europe America Middle East North Total
Source: Airbus & Caribbean America
50-seat 139 402 137 572 263 19 936 2,468
70/85-seat 202 652 294 945 169 60 1,288 3,610
100-seat 165 320 136 643 229 75 675 2,243
125/210-seat 475 4,238 597 3,938 1,111 486 3,889 14,734
Small twin-aisle 202 1,618 124 810 245 475 623 4,097
Intermediate twin-aisle 47 785 30 396 54 193 200 1,705
VLA 40 711 14 281 19 189 64 1,318
Total 1,270 8,726 1,332 7,585 2,090 1,497 7,675 30,175

46| Airline Fleet Management


The impact of the tremendous fleet growth on MRO will be Lufthansa Technik Philippines is a prime example for successful
minimal in the short-term; as the fleet grows and new aircraft international co-operation. Together with our partners from
arrive, the requirement for maintenance will be less. Smith of F&S MacroAsia Corporation, we have established a worldwide
says the expectation is that next generation aircraft will require acknowledged center for excellence for overhaul services of the
less maintenance, the average time before a light C check will be Airbus A330/A340 family over the past years. The 100th heavy
18 to 24 months and 48 to 60 months for a D check. As new check shows that LTP is well-positioned in the market, remarked
aircraft are delivered maintenance will be less intense and less August Henningsen, chairman of the board of Lufthansa Technik.
costly for the operator. The removal of older aircraft will continue
as new engine and aircraft fleet types arrive. Additional training, The headquarters of ST Aerospace, one of the largest MRO
higher skill levels, tools and equipment will be required to service providers in the world, are based in the city-state of Singapore. It
many of these aircraft. also has facilities in the other parts of the Asia-Pacific, the
Americas and Europe. Customers include: All Nippon Airways
According to F&S, the top five MROs for heavy maintenance (ANA), Delta-Northwest Airlines, FedEx Express, Japan Airlines
by share in APAC are: ST Aerospace Services Co., Aircraft and UPS. In December 2009 ST Aero announced the renewal of
Maintenance & Engineering Corporation, Hong Kong Aircraft its maintenance agreement with US Airways worth $60m over
Engineering Company, GMF Aero Asia and Korean Air. The top three years. The deal involves heavy maintenance visits for US
five MROs for engine overhaul are: Rolls Royce Aero Repair & Airways fleet of A330, 737, 757, and 767 aircraft. In December
Overhaul, Japan Airlines International, MTU Maintenance Zhuhai, ST Aero also concluded a $90m deal for airframe heavy
Evergreen Aviation Technologies and Hong Kong Aero Engine maintenance for an unnamed US customer. The MRO provider
Services. will conduct C checks and heavy maintenance visits for A320-
family and 767 aircraft.
International maintenance companies have long been aware of
the advantages of the large geographic region and affordable Partnerships between MRO providers are a feature of the region.
skilled labour. In 2000 Lufthansa Technik Philippines (LTP) was One of the most established players is Ameco Beijing, a 20 year
founded as a JV between Lufthansa Technik and Philippine partnership between Air China and Lufthansa, and also one of the
aviation service provider MacroAsia Corporation. In December first MRO JVs in Chinas MRO industry. Ameco Beijing recently
2009 LTP said it cemented its position as one of the leading signed an agreement with Lufthansa Technik Shenzhen for the
providers of overhaul for Airbus aircraft when it started work on development of PW4000 fan thrust reverser capability. This means
its 100th heavy maintenance check on an A340. Since the that the PW4000 fan thrust reversers of Air China and Air China
introduction of its overhaul capability on the A330/A340 in 2002, Cargo on 747s and 767s will now be maintained inhouse. In the
LTP has steadily grown its customer base to feature operators years ahead, Andreas Meisel, Ameco GM and CEO, says MRO
from Asia, Africa, Australia, Europe and North America. providers should prepare to accept the influx of maintenance that
Customers include: Air Mauritius, Cathay Pacific Airways, ILFC, the regions growth will bring. He states they should be prepared
Philippine Airlines, Lufthansa, Qantas Airways and Virgin Atlantic to meet increased requests for airworthiness and shortened
Airways. turnaround times, while maintaining quality and safety standards.

48| Airline Fleet Management


In December 2009 Malaysia Airlines (MAS) maintenance and decades, MRO participants independently maintained, and
engineering arm, MAS Aerospace Engineering signed a MoU overhaul aircraft components; today it is becoming more difficult
with P&W to form a joint-venture at Kuala Lumpurs Subang through intellectual property rights for the airline and the MRO
Airport that will provide composite repair and overhaul of engine to find the technical data necessary to overhaul their component.
nacelles. The new company will become part of P&Ws Global Both OEM and MROs are in need of boosting margins and both
Services Partners network and will work on P&W engines as well must rethink their strategies.
as those from other manufacturers. MAS will be the launch
customer. P&W says it embarked on the JV because it wanted to The recession has driven a reduction in fleet capacity and this in
strengthen its position in APAC and MAS had a strong presence. turn means there has been a reduction in MRO spending. Tay of
The Malaysian company says it also recently signed a MoU with ST Aerospace points out that one of the challenges for MRO
German company Krauss Aviation Technologies. MAS Aerospace providers is the ability to take on a flood of work after
will work with Krauss to repair parts for engines, landing gears undergoing severe manpower or asset reduction to ride out the
and airframes. The MRO says these two MoUs are part of MAS crisis. MROs may need time to ramp up their skilled workforce
and Malaysias efforts to make Subang Airport a MRO hub and operations to take on the sudden increase in work. On the
accounting for five per cent of the global MRO market by 2015. flip side, if the economy does not improve, MRO companies that
serve aircraft that continue to be grounded may suffer. It will
The Asia-Pacific region has also had a couple of firsts in aviation. take some level of resilience and stability to wait out the
Singapore Airlines was the first to fly the A380 and its subsidiary economic crisis, and for some, the wait might prove too long to
Singapore Airlines Engineering Company (SIAEC) was the first to remain viable. However, he is confident that ST Aerospaces wide
maintain it. In September 2009, SIAEC completed first ever C capability, combined with its diverse customer base and
check on A380 aircraft (after 24 months), the second was geographic presence, will allow it to ride out the storm.
performed in November, and the third in December. Access to the
aircraft (because of its height) was one of the main challenges Asia-Pacific MRO organisations will also face increased
facing the maintenance team, but investment in suitable competition from within their region as well as from those
equipment meant the issue has been overcome. outside the region, eager to gain a piece of the MRO pie.
Emerging MRO facilities in Mexico, Central and South America as
well as North Africa and the Middle East will vie for MRO
Potential hurdles business in Asia. The economy and airline losses are likely to
OEMs are trying to gain a greater share of this lucrative continue challenging the industry. Positive MRO growth and
aftermarket and are offering total aircraft maintenance support increased MRO spending is unlikely in 2010, thus creating a
packages. MROs have expressed concern that OEMs are gaining challenge for MROs to generate new revenue, states Smith.
a competitive advantage. Smith of F&S says: One of the greatest
challenges in the commercial aviation supply chain is intellectual In conclusion, the Asia-Pacific has the capacity to become the
property rights. Some MROs have stated realignment has worlds leading aviation hub. How it recovers from the recession
occurred between airframe and component OEMs. In past will dictate whether or not it is able to fulfil its potential.

Airline Fleet Management | 49


CARGO & FREIGHT OPS Asia Recovery

Last year will be imprinted on our memories as one of the


bleakest for freight operators. Rows of surplus aircraft High expectations
According to ACI, the Asia-Pacific (APAC) region has seen a
were parked in the desert as their owners P&Ls slumped stunning recovery in freight performance with year-on-year
into the red. Yet Asia has been steadily boosting hopes and September figures showing an about-turn from -28 per cent
to an increase of 1.3 per cent. In its latest monthly report (for
global cargo traffic figures. Mary-Anne Baldwin examines
November 2009, published January 2010), it noted outstanding
the Asia-Pacific (APAC) market as we cross into 2010. results from several key hubs. Among the top seven were
Shanghai Pudong, China, which was up 31 per cent compared
to the same month in 2008; also Hong Kong, China, which
rose 16 per cent and Incheon, South Korea, which was up
22 per cent.

In November Chinas Shenzhen Airport announced that it would


increase its weekly cargo operations by almost 100 flights as
from October 2009, 50 per cent up on its summer/autumn
operations, following agreements with UPS and SF Express which
should bring an extra 78 and 20 flights per week respectively.

World Air Transport Statistics (WATS) latest analysis (its 53rd


edition, covering 2008 statistics), states four of the 10 best
international freight carriers (as measured by freight tonne
kilometers, or FTK) are from the APAC region with Korean Air

ASIA-PACIFIC taking the top spot, Cathay Pacific second place and Singapore
Airlines the fourth. Also, Asia is dominating the domestic
segment; half of the top 10 cargo airlines by FTK were Asia-
Pacific-based; these included: China Southern Airlines; Air China;

AIR CARGO China Eastern Airlines; Japan Airlines and All Nippon Airways.

There are high expectations for APACs freighter market. IATA


figures show that the region controls 44.3 per cent of the

OUTLOOK international freight traffic market (as measured by FTK), Europe


has the next largest share with 26 per cent, just over half that of
APAC. Asia is a production hub for global goods, offering
manufacturers both low wages and low overheads. The need to
transport these goods will continue to grow and although sea
DESPITE REPORTS OF MELANCHOLY AND MALAISE WITHIN THE transport remains a popular option, the onus will usually be on
cargo market, Giovanni Bisignani, director general and CEO of fast delivery. In its Global Market Forecast for 2009-2028, Airbus
the International Air Transport Association (IATA) saw glimmers predicts that exports from Asia to North America will increase 4.6
of hope as far back as the middle of 2009, at which point he per cent over the next two decades; to Europe they will increase
said the cargo market had started to stabilise. Its widely accepted by 3.9 per cent; and China as much as nine per cent.
that we are now coming out of the recession, with cargo
statistics marking the way. Freight has taken the impact of the China is the key driver as the manufacturing hub although its
recession, recording sharper declines than passenger trade, yet integrated into an overall supply chain involving other Asian
globally these steep drops are starting to level-off and although countries says Herdman. He explains that exports are propelling
most cargo operators are still recording losses, they are much this growth; not just carried directly out of airports in China but
lower than during the recessions base. Seeing these moderate the other big cargo hubs in the region: Hong Kong, Taipei; Korea;
declines comes as a pleasant surprise and may point to a quicker Singapore.
recovery in the freight sector than previously thought, the
Airports Council International (ACI) said in a report published in
November 2009.

The developments in the last quarter have given people some


encouragement; weve seen the economic recovery led by Asia
and thats manifested itself in further recovery in export volumes,
and that also led to some recovery in yields, says Andrew
Herdman, director general of the Association of Asia-Pacific
Airlines (AAPA). The combination of low volumes and falling
yields means that cargo revenue for the year is down about 25 to
30 per cent, which is pretty severe, but for the last quarter [2009]
youve seen yields have begun to recover.

According to Herdman, The bottom was a long time ago it


happened to coincide with the end of December [2008] so you
could argue that the recovery has been underway since the start
of the year [2009] and its only now that were getting back to
traffic cargo volumes of a year before.

50| Airline Fleet Management


And as the global economy picks-up, demand for Asia-produced
goods will grow, in turn kindling APACs economy and the
demand for goods imported from other regions. According to
Airbus, Asias imports from North America will increase by 4.7
per cent over the next two decades and from Europe they will
rise 4.3 per cent.

Its in the details


Titus Diu, general manager of cargo sales and marketing at
Hong Kong-based Cathay Pacific, parent of Cathay Pacific
Cargo, says: demand was very strong in December, with the
backlog of freight in the key Hong Kong and Shanghai markets
helping to stretch out the peak. This echoes his statement
made in October that there was high demand from Hong Kong
and Shanghai particularly to North America and Europe. Cathay
and its subsidiary Dragonair carried a collective 144,000 tonnes
of cargo during December, up 25 per cent from the same month
2008. The cargo load factor rose 15.7 percentage points to 78.6
per cent, the highest of 2009. Cathay recently announced that
it is to reintroduce five 747-700s, which have been parked in the
Mojave desert for the past year, one of which has already been
sent to its MRO facilities. Its expected that the aircraft will
be some of many Asia-owed aircraft to come out of early
retirement with airlines such as Singapore, Emirates and Korean
Air forecast to follow.

Whether its a trustworthy indication of market growth or a


touch of imprudence, the Civil Aviation Administration of China
has given the nod for a start-up freighter operator to join the
skies. Shunfeng Airways will operate two757-200F on around
20 weekly flights from Shenzhen International Airport. The
Indian start-up, Aryan Cargo Express, plans to launch early this
year with two aircraft leased from Air India and another two
from a Turkish lessor. Aryan will be transporting cargo to East
Asia, Africa, Middle East and Europe. In November it was
disclosed that SF Express, the largest private express carrier in
the Chinese cargo market has laid down CNY25m ($3.66m) in a
JV with Shenzhen Tai Hai Investment. That same month we
heard whispers that Thai Airways wishes to set up its own
freight operations. Yet, it has to be noted that not all cargo
operators are faring well. China-based Grandstar Cargo
International Airlines has yet to make a profit moving its 51 per
cent owner, Sinotrans to consider selling its stake in the
company. It was heard in December that the logistics company
may sell its shares in Grandshare as the cargo operator, which
has not managed any growth in its one year lifespan, has so far
cost Sinotrans $9m.

2009-2028 FREIGHTER DEMAND


Total new aircraft 854
Total converted 2,585
Total aircraft 3,439
Source: Airbus

Airline Fleet Management |51


World
Asia-Pacific freighter fleet to increase five-fold
2009 2028
2009-2028 freighter fleet
1,731 3,864
100% 100%
Europe and CIS
2009 2028 According to Airbus figures there are just 12 Middle Eastern cargo
North America 290 547 Middle East
operators compared with Asia-Pacifics 46 and North Americas 40.
2009 2028 17% 14% One would think there is an expanse in which new cargo operators
2009 2028 Asia-Pacific
982 1,550 can blossom, but while allowing that there is some potential for
41 99 2009 2028
57% 40% 2% 3% growth in the UAEs cargo market, Buhazza says that theres a limit
Africa 277 1,447 to how far this can extend. The Far East for example, benefits from
Latin America 2009 2028 16% 37%
wider land mass while the close proximity of countries within the
2009 2028 61 72
UAE means a restriction on the number of cargo airlines that can
80 149 3% 2%
5% 4% operate successfully. The other thing is that the UAE is an im-
porter, not an exporter. Most of the traffic that comes through the
Source: Airbus UAE, unless it is in transit, is one-way traffic.

Then of course, theres JAL Cargo. At the time of going to press, 2009-2028 freighter demand
parent company JALs market value was $200m having fallen 1,800
$1.8bn in just two days. Shares had dropped 90 per cent to a
record low of $0.05. Also at the time of press, the Enterprise 1,600
Turnaround Initiative Corporation (ETIC), the Japanese state- 340
1,400
backed body, had yet to publish its turnaround programme for
the airline. However, it was believed the body would rule against 1,200
foreign investment from Delta and American Airlines leaving it 1,000
dependant on government aid. With all this its doubt-ful the
800 0
airlines cargo operations will be sold to Nippon Yusen, to merge 514
with its subsidiary, Nippon Cargo Airlines (NCA) in April 2010 as 600 1,285
planned. More likely it will be delayed until around the 3Q or 4Q
of this year. 400 786
514
200
JAL has wider issues and is in the middle of restructuring and
0 Source: Airbus
needs recapitalising I dont think you can separate the cargo Small jets Regional Large
operations from the overall picture there, says Herdman. He & Long-range
adds that while a few operators are still on shaky footing its his Conversions New freighters
belief that they have cleared the worst of it. They [Asian cargo
operators] have survived this long theyll be hanging in there. Where do we do from here?
Overcapacity in the first half of 2009 meant that many customers
Linking world trade could ignore the standard contract rates and pay ad hoc rates of
As the worlds geographical hub, the Middle East will likely be a as little as $1.3 per 10kg, yet this is likely to change. Industry
crucial player in the global freight market providing easy access to predictions forecast rates to average around $2.6 per kg this year
Asia, Africa and Europe. Speaking in interview at the Dubai Air and to stay stable at around this mark.
Show, 2009, Fathi Buhazza, president and CEO of Maximus Air
Cargo, told AFM its chief advantage has been geography. On Demand from the region appears to have fallen in the anticipated
being asked for Maximus plans for 2010, Buhazza gave the in- post-Christmas lull, yet reports suggest that Asia air freight
graining rhetoric: Growth, growth, growth. Yet Buhazza says capacity is tight and is likely to remain so during the 1Q until after
improvement of communication between the various airports in the Chinese New Year. What will evolve then is less clear though
the UAE is a must. He continued that better coordination and we can expect continued growth if supported by healthy oil prices.
planning is needed between each of the Emirate airports but that
Dubai and Abu Dhabi airports are clear examples of the success Oil prices are something that operators in the region will have to
that can be achieved. watch for this year, says Buhazza. Prices in 2009 averaged $60
per barrel but were at about $80 most recently. In terms of
An estimated $147bn has been committed to infrastructure expectations for next year[2010], oil prices are probably going to
developments within the Middle East, including the construction be slightly higher than they have been this year, says Herdman.
of the Dubai Logistics City (DLC), a hub that will integrate all forms Although this would inevitably drive up costs, operators are
of transport. Built between ports, the logistics city will allow cargo much better prepared for fluctuations and fuel peaks having
to be transported between land, sea and air without taxation and learnt the hard way in 2009.
with easy connections. Its aviation hub will be Maktoum
International Airport, an $8.1bn project which when finished will I think weve seen a steady recovery; I think that will continue in
be the worlds largest cargo hub with a capacity of over 12 million terms of volume. Im not that optimistic about yield recovery into
tonnes annually, according to its planner, Dubai World Central. next year[2010] but the indications from purchasing managers
intentions and the general anecdotal reports from the maritime
Yet for all its lofty ambitions, Dubai has plummeted into the sector are that we are seeing a recovery. We are probably going
red much like the West, putting such plans into jeopardy. We to see three per cent global growth in the economy next year
heard in November that Dubai World, the government-owned [2010] according to the IMF [International Monetary Fund]. China
conglomerate, was $59bn in debt. After receiving a $10bn will probably see nine per cent; outside of Japan, the rest of Asia
lifeline from its neighbour, Abu Dhabi, it has made a formal will probably average about six per cent growth.
request for a standstill on repayments of $22m debt. While
Dubais flag carrier, Emirates, parent of Emirates SkyCargo, has Perhaps the danger zone is not oil prices but the need to expand
said that it is financially secure, there are rumours the airline may steadily but slowly a humbling lesson that some overly eager
be used as collateral with Abu Dhabi demanding ownership of airlines (notably Indian) learnt last year. We can but hope this is
the airline in return for its financial support of the Emirate. the regions greatest obstacle this year.

52| Airline Fleet Management


UBM Aviation Conferences
Spring 2010
We provide the aviation community with in-depth market insight, critical business information
direct from leading industry gures and unparalleled networking opportunities.
Save the date!
Make sure you take note of the events that interest you and visit
www.ubmaviationnews.com/conferences.aspx for updates and to register.

Aero Engine Cost Management


9th 10th February 2010 | Hollywood, USA

Airline Line Maintenance


10th 11th February 2010 | Hamburg, Germany

Aero Engine Parts: Repair or Replace?


24th 25th March 2010 | Hamburg, Germany

Middle East Airline Engineering & Maintenance


12th 13th April 2010 | Abu Dhabi, UAE

Airline Technical Purchasing & Maintenance


5th 6th May 2010 | London, UK

Engine Leasing, Trading & Finance


16th 17th June 2010 | London, UK

Asia Pacic Airline Engineering & Maintenance and Purchasing


& Supply Chain Conference
23rd 24th June 2010 | Singapore

For further information or to register: Call: +44 (0)20 7921 8039 Email: conferences@ubm.com
Visit: www.ubmaviationnews.com/conferences.aspx
REGIONAL ECONOMICS Bombardier

Bombardier Aerospace is looking ahead to an improving market and is confident about the future.
Although reticent to overly champion the CSeries, confidence in the new programme is clear.
Sarah Morgan reports.

BOMBARDIER BULLISH
ABOUT THE PROSPECTS
FOR THE CSERIES

BOMBARDIER AEROSPACE, BASED IN MONTREAL, CANADA, RANKS


as the worlds third largest civil aircraft OEM, manufacturing
business, commercial and amphibious aircraft. It is confident about
its current market position and its new CSeries. Although Ben
Boehm, VP commercial aircraft programmes, is at pains to point
out that the programme is in no way superior to any of its other
aircraft. Bombardier prides itself on the range of its products. A
range which Boehm feels leaves the company perfectly
positioned to do well in the market as it starts to recover.

Boehm sees consumer confidence growing due to the fact that


a lot of the airlines are starting some new fleet evaluations.
Thats not to say that theyre all jumping to sign contracts yet, but
fleet planning is a long-term business its not something that
airlines take lightly, they need a lot of information, they need to
build up towards that. And our market analysis teams are on the
road 24/7 right now trying to respond to these fleet requests.
Bombardier is not overly optimistic about the near-term
market it made an announcement of a production slow-down

54| Airline Fleet Management



Bombardier commerical and
business aircraft are the widest
aircraft offerings in the market
today, no one else in the market
offers as wide an offering We do
that for a reason. We dont do that
because we have one favourite
airplane and one favourite son and
the rest are just tagging along.

Ben Boehm, VP commercial aircraft programmes


in April 2009 and on November 26 Bombardier announced 715 along. The manufacturer aims to offer its customers one-stop
job cuts as the result of the shift in CRJ aircraft production rate. shopping.
There are not enough projected CRJ aircraft sales to maintain
the current production plans, Guy Hachey, president and COO,
says. He asserts: We continue to invest in current and in future Niche filler
products, including the CRJ1000 NextGen, Learjet 85 and The latest Bombardier aircraft programme is the CSeries.
CSeries aircraft programmes. According to John Arnone, senior media and public relations
advisor for Bombardier: The 100- to 149-seat market is a large
In reference to the recent order for 22 CRJs from AMR segment that is not well served by any aircraft in production
Corporation, the parent firm of American Airlines, Boehm says: today. So there is great potential for future sales. The aircraft is
This is just one more endorsement for the CRJ product line that currently in what Bombardier calls the joint-definition phase (JDP),
were doing right now and really from our standpoint we have a phase that finalises the shape and function of the aircraft. At
many other customers in the pipeline that were building this point 98 per cent of the suppliers are onboard. Boehm says:
towards too. He asserts Bombardier is confident in all of them And we as the primary integrator, along with all of these
[its aircraft types]. Bombardier commerical and business suppliers, are now working to jointly define what the airplane will
aircraft are the widest aircraft offerings in the market today, no be. So that in the next phase of development, which will start
one else in the market offers as wide an offering We do that soon, all of the suppliers can go home to their respective home
for a reason. We dont do that because we have one favourite sites, factories, design houses and really do their detailed designs,
airplane and one favourite son and the rest are just tagging so this is a pretty important phase in the airplane.

Airline Fleet Management | 55


Breaking new ground and securing a market
Bombardier will be the first manufacturer to use the Pratt &
Whitney PW1500G 17,000-23,000lb thrust range engine.
However, the engine will already be tested before the detailed
design phase. This is the beauty; this is why we are 100 per cent
confident in this engine long before its specific development for
the CSeries it already has flight testing done. So Pratt & Whitney
did ground tests first, they flew it on their own 747, after that they
also flew it on the Airbus test-bed, so really youve got three
different cycles of testing that this engine has already undergone.
Boehms assessment is: This engine is ready to rock and roll.

Arnone says the Pratt & Whitney Pure-Power geared turbofan


engine offers: a bypass ratio of 12:1, this is bigger than any
engine today among similar sized applications, improving fuel
burn and reducing noise; approximately 20 per cent reduction
in carbon dioxide emissions; approximately 50 per cent reduction
in nitrous oxide emissions; and noise reduction: approximately 20
decibels below new stage requirements. Boehm concludes:
were fully confident that the combination of the CSeries and
the P&W engine is the right choice.

Bombardier claims to be breaking ground with the CSeries

Obviously were not just drinking our own Kool-Aid we


maintenance programme: First of all its designed in such a way
that you only ever really need to send a mechanic to touch the
airplane at 100 hour intervals. So thats a break-through in terms
of new airplane design. Then in terms of inspection intervals, our
compare it to everyone elses. And we realise that the
out-of-the-box intervals are set at 750 and 7,500 flight hours
market is bright for aviation, people need to travel. respectively for A and C checks, that too is an out-of-the-box first
Boehm

According to Boehm the main features that the CSeries offers
in the industry for a small single-aisle mainline airplane.

is its incredible shift in economics; a combination of aero-


dynamics, weight, systems efficiency and obviously the engine
means that the series burns over 20 per cent less fuel than the
nearest competitors. He goes on to include Embraer, Airbus and
Boeing production aircraft in this comparison. He also mentions
that Being the widest five-abreast airplane in the market means
that passenger comfort and onboard stowageis incredible. Over
90 per cent of the passengers on a typical flight can bring a
normal roller bag suitcase onboard.

Bombardier has not faced any major


challenges in the development prog-
ramme. Although Boehm stresses:
I think building an airplane to a
development programme is al-
ways going to be a challenge, I
dont want to diminish that, thats
why weve given ourselves so much
time. The manufacturer has been working
to a 63-month programme from launch into a
three-month entry-into-service, which is slightly longer on
average than its past seven development programmes. He
asserts, We are anticipating small challenges along the way
because of the new technologies, but because weve built
ourselves a proper schedule that takes those into account, were
pretty confident going forward.

There have been notable successes in the programme so far.


On August 19 a 23ft-long fuselage test barrel was delivered to
Montreal, made by Chinas Shenyang Aircraft Corporation,
Bombardiers main supplier, two weeks ahead of schedule. Boehm
highlights that this means testing a barrel of the new materials
long before the design freeze, allowing the company to reduce
risk and get this aircraft ready for entry into service in 2013.

56| Airline Fleet Management


According to Bombardier, the 100- and 149-seat market segment new Bombardier aerospace product development centre (APDC)
will encompass 6,300 aircraft over the next 20 years. And located in Saint-Laurent (Quebec).
historically Bombardier has always achieved around 50 per cent
share of any market in which we compete. The future of Bombardier
Boehm outlines Bombardiers goals for the coming year as working
Currently the new CSeries has Lufthansa and LCI as its customers, with its customers to help them return back to either better
with 30 and 20 firm orders respectively. Lufthansa has taken options profitability or profitability in general. Its been a tough year for our
on a further 30 and LCI has 20 aircraft options. Boehm says that commercial aircraft customers. I think we are all starting to see a
Bombardier is talking to 150 different customers about the CSeries. little light at the end of the tunnel, so were going to work very
These include leasing companies, airlines, main carriers and low-fare closely with them from a customer support stand-point, with their
carriers and expects a new order soon. existing fleets and with their fleet planners for their new fleets to
help them be ready for the up-turn when it happens.
The CS100 will be the first CSeries to enter-into-service. Arnone
says the aircraft offers significant flexibility with an array of cabin Boehm says Bombardier is extremely bullish about its market
configurations to match commercial airline needs. Configurations forecast for the next 20 years. He adds: Obviously were not just
range from mixed-class seating for 100 passengers to high density drinking our own Kool-Aid we compare it to everyone elses. And
single-class seating for 125 passengers. He notes: Its modular we realise that the market is bright for aviation, people need to
forward and aft cabins, including galleys and lavatories, enhance travel. Developing markets, be that China, be that India, be that
the aircrafts versatility. South America, be that the Middle East, all have a tremendous
need for new airplanes, new growth. And then we just look back
Interiors and seats will be sourced from C&D (Zodiac group). at the two heart markets, Europe and North America: massive
Avionics will be sourced from Rockwell Collins. Chinas Shenyang fleets of ageing airplanes all requiring replacement airplanes out
Aircraft Corporation (SAC), already mentioned, a unit of AVIC I, there. He is confident Bombardier can supply these markets. He
will provide the centre fuselage as well as the tailcone and doors says that in China Bombardier has strong, strong opportunities,
of the CSeries. Parker Hannifin will provide the fly-by-wire system. as its CSeries can fly from Chinas most difficult airport, Lasa.

The final assembly line will take place near Bombardiers assembly So it seems that despite the tough economic times, Bombardier
facility in Mirabel (Quebec), in a new plant that has yet to be built. intends to capture a good part of the 100- to 249-seat market with
The cockpit and aft fuselage will be done at Bombardiers Saint- a structured range of products. Boehm declares: our next 10, 20
Laurent (Quebec) facility. The development will take place in the years, theyre going to go very well.

Obviously were not just drinking our own Kool-Aid we compare it to


everyone elses. And we realise that the market is bright for aviation,
people need to travel.

Airline Fleet Management | 57


FACTS & FIGURES Fleet finance, firm orders, aircraft transactions, list prices and lease rates

Aircraft transactions 21st Oct 2009 11th Jan 2010


Contract Owner Operator Event
Date S/N A/C Model Variant Reg No Name Name Remarks
21-Oct-09 1035 Lockheed L-188 Electra PF N341HA Rockland Aerospace Rockland Aerospace Purchased - parked
21-Oct-09 1017 Lockheed L-188 Electra AF N5512 Rockland Aerospace Rockland Aerospace Purchased - parked
21-Oct-09 3055 Fairchild/Dornier 328 9-Apr-00 OY-NCG Sun-Air of Scandinavia Sun-Air of Scandinavia Purchd off lease / fin term completed
21-Oct-09 1104 Lockheed L-188 Electra CF N284F Rockland Aerospace Rockland Aerospace Purchased - parked
21-Oct-09 3061 Fairchild/Dornier 328 9-Apr-00 OY-NCK Sun-Air of Scandinavia Sun-Air of Scandinavia Purchd off lease / fin term completed
21-Oct-09 4273 Bombardier (de Havilland) Dash 8 400 NextGen LN-WDH SAS Wideroe Purchd - subt to existing lease - pkd
21-Oct-09 1033 Lockheed L-188 Electra AF N5522 Rockland Aerospace Rockland Aerospace Purchased - parked
21-Oct-09 1014 Lockheed L-188 Electra AF N5510L Rockland Aerospace Rockland Aerospace Purchased - parked
21-Oct-09 3047 Fairchild/Dornier 328 9-Apr-00 OY-NCA Sun-Air of Scandinavia Sun-Air of Scandinavia Purchd off lease / fin term completed
22-Oct-09 380 Bombardier (de Havilland) Dash 8 9-Apr-00 N982HA Skytrans Airlines Skytrans Airlines Purchased - parked
22-Oct-09 486 Bombardier (de Havilland) Dash 8 18-Jul-00 N349PH Avmax Group Inc Avmax Intl Aircraft Leasing Inc Purchased - parked
22-Oct-09 7036 Fairchild/Dornier 228 9-Apr-00 ZS-NGW Orionbelt Trading CC Orionbelt Trading CC Purchased - parked
22-Oct-09 477 Bombardier (de Havilland) Dash 8 18-Jul-00 N346PH Avmax Group Inc Avmax Intl Aircraft Leasing Inc Purchased - parked
23-Oct-09 19000319 Embraer 190 ST PH-EZH HSH Global Aircraft Fund 1 KLM cityhopper Purchd - sale & lease-back on del
23-Oct-09 22317 Boeing 767 200ERSF (GE) N315AA 767 Aircraft One LLC Cargo Aircraft Mgmt Inc Purchased - parked
23-Oct-09 35753 Boeing 737 (NG) 800 Winglets B-5479 Changjiang Leasing Company Hainan Airlines Purchd - sale & lease-back on del
25-Oct-09 659 Bombardier (de Hd) DHC-6 TO 26-Oct-00 8Q-MBB Seaplane Holdings AS Seaplane Holdings AS Purchased - parked
26-Oct-09 37857 Boeing 767 300ERF (GE) N336UP CC & EI LLC UPS Airlines Purchd - sale & lease-back on del
26-Oct-09 8021 Fairchild/Dornier 228 18-Jul-00 ZS-NRN Black Ginger 425 (PTY) Ltd Black Ginger 425 (PTY) Ltd Purchased - parked
26-Oct-09 8067 Bombardier (Canadair) CRJ RJet Challenger 850 C-GDTD Flightexec Flightexec Purchased
27-Oct-09 3091 Fairchild/Dornier 328 9-Apr-00 N391EF Sierra Nevada Corporation Sierra Nevada Corporation Purchased - parked
27-Oct-09 625 Bombardier (de Hd) DHC-6 TO 26-Oct-00 C-FNBL 491549 Alberta Ltd Ashe Aircraft Enterprises Ltd Purchd - sale & lease-back - pkd
27-Oct-09 19000173 Embraer 190 AR N960UW Republic Airlines US Airways Purchd - subject to existing lease
27-Oct-09 3091 Fairchild/Dornier 328 9-Apr-00 D-CIRQ 328 Support Services GmbH 328 Support Services GmbH Purchased - parked
27-Oct-09 19000188 Embraer 190 AR N962UW Republic Airlines US Airways Purchd - subject to existing lease
27-Oct-09 19000206 Embraer 190 AR N966UW Republic Airlines US Airways Purchd - subject to existing lease
27-Oct-09 387 ATR ATR 72 28-Jul-00 N641AS Air Contractors Air Contractors Purchased - parked
27-Oct-09 37136 Boeing 777 300ER (GE) HL7784 GAIF II Korean Air Purch- sale to S.P.C. by lessor on del
27-Oct-09 19000216 Embraer 190 AR N968UW Republic Airlines US Airways Purchd - subject to existing lease
27-Oct-09 19000197 Embraer 190 AR N964UW Republic Airlines US Airways Purchd - subject to existing lease
28-Oct-09 29866 Boeing 737 (NG) BBJ1 N720CH US Aircraft Holdings Inc US Aircraft Holdings Inc Purchased
28-Oct-09 36606 Boeing 737 (NG) 800 Winglets VH-VUR Pacific Triangle Leasing Ltd Virgin Blue Airlines Purchd - sale & lease-back on del
28-Oct-09 4063 Airbus A320 210 (CFM) F-GKXU Newport Leasing (Cayman) 4063 Ltd Air France Purchd - sale to S.P.C. by lessor on del
28-Oct-09 25218 Boeing 737 (CFMI) 14-May-01 N22YH Tag Aviation (Stansted) Ltd Tag Aviation (Stansted) Ltd Purchased - parked
29-Oct-09 23414 Boeing 737 (CFMI) 26-Oct-00 N324SW Magellan Aviation Services Ltd Southwest Airlines Purchd - subject to existing lease
29-Oct-09 36553 Boeing 737 (NG) 800 Winglets VT-JBK Shell Maker Leasing LLC Jet Airways Purchd - sale to S.P.C. by lessor on del
29-Oct-09 49308 Boeing (McDonnell-Douglas) MD-80 82 (MDC) N296AA GA Telesis LLC GA Telesis LLC Purchased - parked
29-Oct-09 1058 Airbus A330 340 (RR) VQ-BCQ Aercap Ireland Ltd Aeroflot Russian Airlines Purchd - sale to S.P.C. by lessor on del
30-Oct-09 48123 Boeing (McDonnell-Douglas) DC-9 3-Feb-00 N927L Dynamic JetLease LLC Dynamic Aviation Group Inc Purchd - sale & lease-back - pkd
30-Oct-09 UE-131 Hawker Beechcraft 1900 D ZS-SNJ National Airways Corporation National Airways Corp Purchased - parked
30-Oct-09 47293 Boeing (McDonnell-Douglas) DC-9 32 (Stg 3 Hks) N889JM Dynamic JetLease LLC Dynamic Aviation Group Inc Purchd - sale & lease-back - pkd
30-Oct-09 47611 Boeing (McDonnell-Douglas) DC-9 32 (Stg 3 Hks) N883JM Dynamic JetLease LLC Dynamic Aviation Group Inc Purchd - sale & lease-back - pkd
30-Oct-09 1052 Airbus A330 240 (RR) PK-GPI Aercap Ireland Ltd Garuda Indonesia Purchd - sale to S.P.C. by lessor on del
30-Oct-09 344 Bombardier (de Havilland) Dash 8 9-Apr-00 N845EX Undisclosed Bank / Broker / Lessor Piedmont Airlines Purchd - subject to existing lease
30-Oct-09 33520 Boeing 737 (NG) 800 Winglets N812NN AFS Investments 71 LLC American Airlines Purchd - sale & lease-back on del
30-Oct-09 47292 Boeing (McDonnell-Douglas) DC-9 32 (Stg 3 Hks) N882JM Dynamic JetLease LLC Dynamic Aviation Group Inc Purchd - sale & lease-back - pkd
30-Oct-09 UE-132 Hawker Beechcraft 1900 D ZS-SNK National Airways Corporation National Airways Corp Purchased - parked
30-Oct-09 326 Bombardier (de Havilland) Dash 8 9-Apr-00 N846EX Undisclosed Bank / Broker / Lessor Piedmont Airlines Purchd - subject to existing lease - pkd
30-Oct-09 47592 Boeing (McDonnell-Douglas) DC-9 32 (Stg 3 Hks) N897JM Dynamic JetLease LLC Dynamic Aviation Group Inc Purchd - sale & lease-back - pkd
30-Oct-09 47554 Boeing (McDonnell-Douglas) DC-9 32 (Stg 3 Hks) N894JM Dynamic JetLease LLC Dynamic Aviation Group Inc Purchd - sale & lease-back - pkd
30-Oct-09 30316 Boeing 777 200ER (RR) G-YMMN ICBC Leasing Co British Airways Purchd - sale & lease-back
31-Oct-09 146 Bombardier (de Havilland) DHC-6 TO 18-Jul-00 8Q-MAT Seaplane Holdings AS Maldivian Air Taxi Purchd - subject to existing lease
31-Oct-09 259 Bombardier (de Havilland) DHC-6 TO 26-Oct-00 8Q-MAO Seaplane Holdings AS Maldivian Air Taxi Purchd - subject to existing lease
31-Oct-09 374 Bombardier (de Havilland) DHC-6 TO 26-Oct-00 8Q-MAH Seaplane Holdings AS Maldivian Air Taxi Purchd - subject to existing lease
31-Oct-09 279 Bombardier (de Havilland) DHC-6 TO 26-Oct-00 8Q-MAI Seaplane Holdings AS Maldivian Air Taxi Purchd - subject to existing lease
2-Nov-09 8087 Bombardier (Canadair) CRJ RJet Challenger 850 5A-UAD United Aviation United Aviation Purchased - parked
2-Nov-09 4276 Bombardier (de Havilland) Dash 8 3-Feb-01 G-PTHC MIG Aviation (UK) Ltd Olympic Air Purchd - sale & lease-back on del - pkd
2-Nov-09 41096 BAE SYSTEMS (Jetstream) Jetstream 41 9N-AJC Yeti Airlines Yeti Airlines Purchased - parked
2-Nov-09 46937 Boeing (McDonnell-Douglas) DC-10 30F (M) CP-2555 Sunigton SA TAB Airlines Purchd - subject to existing lease - pkd
2-Nov-09 284 Airbus A330 340 (RR) C-GFAJ Air Canada Air Canada Purchd off lease / fin term compd
2-Nov-09 21710 Boeing 737 (JT8D) 200C Adv ZS-SMX Clear Blue Capital PTY Ltd Clear Blue Capital PTY Ltd Purchased - parked
3-Nov-09 41064 BAE SYSTEMS (Jetstream) Jetstream 41 9N-AIQ Agni Air Agni Air Purchased - parked
3-Nov-09 30155 Boeing 737 (NG) 800 Winglets PK-GMC DAE Capital Garuda Indonesia Purchd - sale & lease-back on del
3-Nov-09 E3361 BAE SYSTEMS (Avro) RJ Avroliner RJ100 OO-DWL BAE SYSTEMS (Operations) Ltd Brussels Airlines Purchd - subject to existing lease
3-Nov-09 668 Bombardier (de Havilland) Dash 8 300MPA JA723A Sojitz Avisys Corp Japan Coast Guard Purch- sale & lease-back on del - pkd
3-Nov-09 22252 Boeing 727 200F(M) Adv N746DH Kalitta Charters II LLC Kalitta Charters II LLC Purchased - parked
(Raisbeck Stg 3 Sy)s
4-Nov-09 30918 Boeing 737 (NG) 800 Winglets N813NN AFS Investments 71 LLC American Airlines Purchd - sale & lease-back on del
4-Nov-09 120260 Embraer EMB-120 Brasilia ER ZS-PBT Sahara African Living Pty Allegiance Air Purchased
4-Nov-09 704 Airbus A310 320 (P&W) 7O-ADW Yemenia Yemenia Purchd off lease / fin term com
4-Nov-09 702 Airbus A310 320 (P&W) 7O-ADV Yemenia Yemenia Purchd off lease / fin term completed
5-Nov-09 E2108 BAE SYSTEMS (HS) 146 18-Jul-00 G-CFDH Altavia Jet Services Altavia Jet Services Purchased - parked
5-Nov-09 TC-362 Fairchild (Swearingen) Metro II N51GW Frank and Cheryl Behrendt Frank and Cheryl Behrendt Purchased - parked
5-Nov-09 23924 Boeing 737 (CFMI) 26-Oct-00 LY-AWH Avia Funds Management Avia Asset Management Purchased - parked
6-Nov-09 47072 Boeing (McDonnell-Douglas) DC-9 31PC (M) (Stg 3 Hks) N906AX Stewart Industries Intl LLC Stewart Industries Intl LLC Purchased - parked
6-Nov-09 47497 Boeing (McDonnell-Douglas) DC-9 41PC (M) (Stg 3 Hks) N971AX Stewart Industries Intl LLC Stewart Industries Intl LLC Purchased - parked
6-Nov-09 7704 Bombardier (Canadair) CRJ R Jet 200LR N387DF Avmax Group Inc Avmax Intl Ac Leasing Inc Purchd - subject to existing lease - pkd
6-Nov-09 47003 Boeing (McDonnell-Douglas) DC-9 31PC (M) (Stg 3 Hks) N946AX Stewart Industries Intl LLC Stewart Industries Intll LLC Purchased - parked
6-Nov-09 36607 Boeing 737 (NG) 800 Winglets VH-VUS Pacific Triangle Leasing Ltd Virgin Blue Airlines Purchd - sale & lease-back on del
6-Nov-09 47004 Boeing (McDonnell-Douglas) DC-9 31PC (M) (Stg 3 Hks) N947AX Stewart Industries Intl LLC Stewart Industries Intl LLC Purchased - parked
6-Nov-09 47522 Boeing (McDonnell-Douglas) DC-9 32PC (M) (Stg 3 Hks) N985AX Stewart Industries International LLC Stewart Industries Intl LLC Purchased - parked
6-Nov-09 4095 Airbus A320 210 (CFM) CS-TNT Aircraft Lease Securitisation II Ltd TAP Portugal Securitized
6-Nov-09 47494 Boeing (McDonnell-Douglas) DC-9 41PC (M) (Stg 3 Hs) N970AX Stewart Industries Intl LLC Stewart Industries Intl LLC Purchased - parked
6-Nov-09 AC-612 Fairchild (Swearingen) Metro III VH-EEQ Winrye Aviation Pty Ltd Winrye Aviation Pty Ltd Purchased - parked
9-Nov-09 488 Bombardier (de Havilland) Dash 8 18-Jul-00 C-GCTX World Wide Aircraft Ferrying Ltd First Security Leasing Comp Purchd - subject to existing lease - pkd
9-Nov-09 360 Airbus A310 200F (GE) N412FE FedEx FedEx Purchd off lease / fin term com- pkd
9-Nov-09 49264 Boeing (McDonnell-Douglas) MD-80 82 (MDC) N14810 Ascent Aviation Services Corp Ascent Aviation Services Corp Purchased - parked
9-Nov-09 23084 Boeing 737 (JT8D) 200 Adv (Stg 3 Hks) N312DL Ascent Aviation Services Corp Ascent Aviation Services Corp Purchased - parked

58| Airline Fleet Management


FACTS & FIGURES Fleet finance, firm orders, aircraft transactions, list prices and lease rates

Aircraft transactions 21st Oct 2009 11th Jan 2010 continued


Contract Owner Operator Event
Date S/N A/C Model Variant Reg No Name Name Remarks
10-Nov-09 4084 Airbus A320 210 (CFM) F-GKXV Newport Leasing (Cayman) 4084 Ltd Air France Purchd - sale to S.P.C. by lessor on del
10-Nov-09 37303 Boeing 747 400ERF (GE) N797BA RDM Ltd LoadAir Cargo Purchd - sale & lease-back on del - pkd
10-Nov-09 595 Airbus A310 300 (GE) EK-31095 Vertir Airlines Vertir Airlines Purchased - parked
10-Nov-09 1973 Airbus A320 210 (CFM) N197FG Macquarie AirFinance Macquarie AirFinance Purchased - parked
10-Nov-09 120162 Embraer EMB-120 Brasilia ER ZS-SMV Runway Asset Managment (Pty) Naturelink Aviation Purchased - parked
10-Nov-09 548 Bombardier (de Havilland) Dash 8 26-Oct-00 C-GAQN North Cariboo Air North Cariboo Air Purchased
10-Nov-09 37304 Boeing 747 400ERF (GE) N798BA RDM Ltd LoadAir Cargo Purchd - sale & lease-back on del - pkd
10-Nov-09 UE-43 Hawker Beechcraft 1900 D N243CJ Skyline Enterprise Corp Skyline Enterprise Corp Purchased - parked
11-Nov-09 23969 Boeing 747 300 (P&W) N768CK Kalitta Air Kalitta Air Purchased - parked
11-Nov-09 3021 Airbus A320 210 (CFM) D-ABDN Air Berlin 3. LeaseLux S.a.r.l. airberlin Purchased - sale & lease-back
11-Nov-09 23969 Boeing 747 300 (P&W) JA8185 JALUX Inc JALUX Inc Purchased - parked
12-Nov-09 24654 Boeing 737 (CFMI) 26-Oct-00 N379UA Universal Asset Management Inc Universal Asset Mgmt Inc Purchased - parked
12-Nov-09 47631 Boeing (McDonnell-Douglas) DC-9 41PC (M) (Stg 3 Hks) N972AX DHL Network Operations (USA) Inc DHL Network Operations (USA) Inc Purchased - parked
12-Nov-09 24319 Boeing 737 (CFMI) 26-Oct-00 N351UA Universal Asset Management Inc Universal Asset Management Inc Purchased - parked
12-Nov-09 47465 Boeing (McDonnell-Douglas) DC-9 33CF (Stg 3 Hks) N932AX DHL Network Operations (USA) Inc DHL Network Operations (USA) Inc Purchased - parked
12-Nov-09 47363 Boeing (McDonnell-Douglas) DC-9 33RC (Stg 3 Hkits) N930AX DHL Network Operations (USA) Inc DHL Network Operations (USA) Inc Purchased - parked
12-Nov-09 53520 Boeing (McDonnell-Douglas) MD-80 83 (MDC) UR-CDN Khors Air Khors Air Purchased - parked
12-Nov-09 3665 Bombardier (Shorts) 360 Advanced N391RC Potomac Aviation Inc Potomac Aviation Inc Purchased - parked
12-Nov-09 3665 Bombardier (Shorts) 360 Advanced N391RC IAL Corp IAL Corp Purchased - parked
12-Nov-09 47761 Boeing (McDonnell-Douglas) DC-9 41PC (M) (Stg 3 Hks) N959AX DHL Network Operations (USA) Inc DHL Network Operations (USA) Inc Purchased - parked
12-Nov-09 47040 Boeing (McDonnell-Douglas) DC-9 32CF (Stg 3 Hks) N904AX DHL Network Operations (USA) Inc DHL Network Operations (USA) Inc Purchased - parked
13-Nov-09 47465 Boeing (McDonnell-Douglas) DC-9 33CF (Stg 3 Hks) N932AX Everts Air Cargo Everts Air Cargo Purchased - parked
13-Nov-09 19254 Boeing 727 100RE M-FAHD Prime Air Corporation Prime Air Corporation Purchased
13-Nov-09 19359 Boeing 727 100F (Stg 3 Hks) N261FL Professional Maintenance Services Inc Pro Maintenance Services Inc Purchased - parked
13-Nov-09 4691 Lockheed Hercules L-100-30 1-May-03 United Arab Emirates Air Force United Arab Emirates Air Force Purchased - parked
13-Nov-09 1973 Airbus A320 210 (CFM) N197FG Undisclosed Bank / Broker / Lessor Macquarie AirFinance Purchased - parked
13-Nov-09 47040 Boeing (McDonnell-Douglas) DC-9 32CF (Stg 3 Hks) N904AX Everts Air Cargo Everts Air Cargo Purchased - parked
13-Nov-09 24297 Boeing 737 (CFMI) 26-Oct-00 N297AG AAG XVIII LLC Aurora Aviation Group Purchased - parked
13-Nov-09 19000322 Embraer 190 ST PH-EZI HSH Global Aircraft Fund 1 KLM cityhopper Purchd - sale & lease-back on del
13-Nov-09 47363 Boeing (McDonnell-Douglas) DC-9 33RC (Stg 3 Hks) N930AX Everts Air Cargo Everts Air Cargo Purchased - parked
15-Nov-09 4242 Bombardier (de Havilland) Dash 8 3-Feb-01 G-ECOP Nordic Aviation Capital Flybe Purchased - sale & lease-back
15-Nov-09 35073 Boeing 737 (NG) 10-Mar-02 B-5321 Pembroke Group Shandong Airlines Purchd - subject to existing lease
15-Nov-09 4255 Bombardier (de Havilland) Dash 8 3-Feb-01 G-FLBB Nordic Aviation Capital Flybe Purchased - sale & lease-back
15-Nov-09 35795 Boeing 737 (NG) 800 Winglets A6-FDB Macquarie AirFinance FlyDubai Purchd - sale & lease-back on del
15-Nov-09 4253 Bombardier (de Havilland) Dash 8 3-Feb-01 G-FLBA Nordic Aviation Capital Flybe Purchased - sale & lease-back
15-Nov-09 49397 Boeing (McDonnell-Douglas) MD-80 83 (MDC) N838AM Aeromexico Aeromexico Travel Purchd off lease / fin term completed
15-Nov-09 137 General Dynamics (Convair) 580 VH-PDL Conair Aviation Conair Aviation Purchased - parked
15-Nov-09 386 Airbus A310 200 (GE) TC-JCO Yildizlar Aviation Yildizlar Aviation Purchased - parked
15-Nov-09 22738 Boeing 737 (JT8D) 200 Advanced XA-UMP Global Air Global Air Purchased - parked
15-Nov-09 8063 Bombardier (Canadair) CRJ Regional Jet Challenger 850 OE-IKG MAP Executive Flightservice MAP Executive Flightservice Purchased
15-Nov-09 126 General Dynamics (Convair) 580 (SCD) VH-PDX Conair Aviation Conair Aviation Purchased - parked
15-Nov-09 35075 Boeing 737 (NG) 10-Mar-02 B-5331 Pembroke Group Shandong Airlines Purchd - subject to existing lease
15-Nov-09 86 General Dynamics (Convair) 580 (SCD) VH-PDW Conair Aviation Conair Aviation Purchased - parked
15-Nov-09 4248 Bombardier (de Havilland) Dash 8 3-Feb-01 G-ECOR Nordic Aviation Capital Flybe Purchased - sale & lease-back
15-Nov-09 1201 Lockheed L-1011 TriStar 18-Jul-00 S2-AKB Sky Capital Airlines Sky Capital Airlines Purchased - parked
15-Nov-09 35080 Boeing 737 (NG) 800 Winglets C-GWWJ Unconfirmed Operating Lessor WestJet Purchd - subject to existing lease
15-Nov-09 49281 Boeing (McDonnell-Douglas) MD-80 21-Mar-00 JA8497 JALUX Inc JALUX Inc Purchased - parked
16-Nov-09 614 ATR ATR 42 14-May-01 F-OHJJ ATR ATR Purchased - parked
16-Nov-09 2177 NAMC YS-11 A-200 RP- Unconfirmed Philippine Airline Unconfirmed Philippine Airline Purchased - parked
16-Nov-09 2164 NAMC YS-11 A-200 RP- Unconfirmed Philippine Airline Unconfirmed Philippine Airline Purchased - parked
16-Nov-09 19898 Boeing 747 100F (M) N479EV Evergreen Aviation Sales & Leasing Co Evergreen International Airlines Purchd - subject to existing lease
16-Nov-09 UE-104 Hawker Beechcraft 1900 D HK-4673 Aerolet Aerolet Purchased - parked
16-Nov-09 20153 Boeing 727 200F (M) (DuganAir Stg 3 Sys) N281FL Intal Trading Comp of Yukon Inc Kelowna Flightcraft Purchd - sale & lease-back - pkd
16-Nov-09 36692 Boeing 737 (NG) 800 Winglets JA737X OAC Sky One Skymark Airlines Purchd - sale to S.P.C. by lessor on del
16-Nov-09 614 ATR ATR 42 14-May-01 OY-EDE Nordic Aviation Capital Nordic Aviation Capital Purchased - parked
17-Nov-09 E1160 BAE SYSTEMS (HS) 146 9-Apr-00 G-BVLJ Inflite Engineering Inflite Engineering Purchased - parked
17-Nov-09 10274 Bombardier (Canadair) CRJ700 RJet Challenger 870 NG YV2088 Petroleros de Venezuela SA Conviasa Purchased
17-Nov-09 341 ATR ATR 72 18-Jul-00 F-WKVJ ATR ATR Purchased - parked
17-Nov-09 10275 Bombardier (Canadair) CRJ700 RJet Challenger 870 NG YV2115 Petroleros de Venezuela SA Conviasa Purchased
17-Nov-09 33 Airbus A380 860 (EA) F-HPJA GIE Calynati Air France Purchd - sale & lease-back on del
17-Nov-09 4106 Airbus A320 210 (CFM) CS-TNU Aircraft Lease Securitisation II Ltd TAP Portugal Securitized
18-Nov-09 17000299 Embraer 170 ST JA216J Santos Leasing J-Air Purchd - sale & lease-back on del
18-Nov-09 19000321 Embraer 190 AR VH-ZPO VB E190 2009 No.2 Pty Ltd Virgin Blue Airlines Purchd - sale & lease-back on del
18-Nov-09 21035 Boeing 747 200B (P&W) N559EV Baltia Air Lines Baltia Air Lines Purchased - parked
18-Nov-09 667 Bombardier (de Havilland) Dash 8 26-Oct-00 N808MR USAF US Dept of Hland Security Purchd - sale & lease-back on del - pkd
19-Nov-09 35775 Boeing 737 (NG) 800 Winglets B-5471 CDB Leasing Company Shanghai Airlines Purchd - sale & lease-back on del
19-Nov-09 413 ATR ATR 72 28-Jul-00 N643AS Air Contractors Air Contractors Purchased - parked
19-Nov-09 285 Bombardier (de Havilland) DHC-6 TO 300 Vista Liner TI- NatureAir NatureAir Purchased
19-Nov-09 24965 Boeing 757 200 (P&W) N993FD FedEx FedEx Purchased - parked
19-Nov-09 49535 Boeing (McDonnell-Douglas) MD-80 28-Mar-00 N904DL Delta Air Lines Delta Air Lines Purchd off lease / fin term com
19-Nov-09 49905 Boeing (McDonnell-Douglas) MD-80 82 (MDC) ZS-TOG Global Aviation Investments (Pty) Ltd Global Aviation Leasing Purchased - parked
20-Nov-09 UE-323 Hawker Beechcraft 1900 D OY- Undisclosed Bank / Broker / Lessor Undisclosed Bank / Broker / Lessor Purchased - parked
20-Nov-09 24857 Boeing 737 (CFMI) 3-Feb-01 5A-MAB Buraq Air Buraq Air Purchased - parked
20-Nov-09 4099 Airbus A321 210 (CFM) VQ-BEE General Electric Capital Corp Aeroflot Russian Airlines Purchd - sale & lease-back on del
20-Nov-09 24103 Boeing 737 (JT8D) 200 Advanced XA-UMQ Global Air Global Air Purchased - parked
20-Nov-09 UE-405 Hawker Beechcraft 1900 D D2-EWX SonAir Airline Services SA SonAir Airline Services SA Purchased
20-Nov-09 49760 Boeing (McDonnell-Douglas) MD-80 28-Mar-00 N701ME Dynamic Airways LLC Dynamic Aviation Group Inc Purchased - parked
23-Nov-09 2570 Airbus A319 130 (IAE) N836AW AWAS 2570 Trust US Airways Purchd - subject to existing lease
23-Nov-09 3055 Airbus A320 210 (CFM) D-ABDO Air Berlin 3. LeaseLux S.a.r.l. airberlin Purchased - sale & lease-back
23-Nov-09 49760 Boeing (McDonnell-Douglas) MD-80 28-Mar-00 N701ME Dynamic JetLease LLC Dynamic Aviation Group Inc Purchased - parked
23-Nov-09 33208 Boeing 737 (NG) 800 Winglets N815NN NAS Investments 10 LLC American Airlines Purchd - sale & lease-back on del
24-Nov-09 1069 Airbus A330 240 (RR) N282AY GAIF Investment Sixty-Two LLC US Airways Purchd - sale & lease-back on del
24-Nov-09 4105 Airbus A320 210 (CFM) F-GKXY Whitney Leasing Ltd Air France Purchd - sale to S.P.C. by lessor on del
24-Nov-09 29661 Boeing 737 (NG) 10-Mar-02 N Aviation Capital Group Aviation Capital Group Purchased
24-Nov-09 190 CASA 212 18-Jul-00 N352CA Artic Transportation Services Inc Arctic Circle Air Service Purchased
24-Nov-09 2595 Airbus A319 130 (IAE) N837AW AWAS 2595 Trust US Airways Purchd - subject to existing lease
24-Nov-09 1012 Lockheed L-1011 TriStar 1 Freighter S2-AET Sky Capital Airlines Sky Capital Airlines Purchased - parked
24-Nov-09 36 Saab 340 A N727DL Continent Aircraft Trust No 1587 Club SAAB 340 Purchd - sale & lease-back - pkd

Airline Fleet Management |59


FACTS & FIGURES Fleet finance, firm orders, aircraft transactions, list prices and lease rates

Aircraft transactions 21st Oct 2009 11th Jan 2010 continued


Contract Owner Operator Event
Date S/N A/C Model Variant Reg No Name Name Remarks
24-Nov-09 36 Saab 340 A N727DL Club SAAB 340 Club SAAB 340 Purchased - parked
25-Nov-09 2025 BAE SYSTEMS (HS) ATP CS-TGX Regional One Inc Regional One Inc Purchased - parked
25-Nov-09 UE-190 Hawker Beechcraft 1900 D N190YV MTW Aerospace Inc MTW Aerospace Inc Purchased - parked
25-Nov-09 24554 Boeing 737 (CFMI) 3-Feb-01 N432US AWAS 24554 Trust US Airways Purchd - subject to existing lease
25-Nov-09 30100 Boeing 737 (NG) 800 Winglets N978AN AWAS 30100 Trust American Airlines Purchd - subject to existing lease
25-Nov-09 TC-311 Fairchild (Swearingen) Metro II N226FA Aeronaves TSM Aeronaves TSM Purchased - parked
25-Nov-09 3750 Bombardier (Shorts) 360 26-Oct-00 ZS-OXU Mouritzen Family Trust Mouritzen Family Trust Purchased - parked
25-Nov-09 30096 Boeing 737 (NG) 800 Winglets N970AN AWAS 30096 Trust American Airlines Purchd - subject to existing lease
26-Nov-09 E2031 BAE SYSTEMS (HS) 146 18-Jul-00 N66LN Regional One Inc Regional One Inc Purchased - parked
27-Nov-09 3814 Airbus A321 210 (CFM) F-GTAU Rook Ltd Air France Purchased - sale & lease-back
27-Nov-09 8238 Fairchild/Dornier 228 18-Jul-00 XA- Unconfirmed Mexican Airline Unconfirmed Mexican Airline Purchased - parked
29-Nov-09 E2201 BAE SYSTEMS (HS) 146 18-Jul-00 OB- Star Peru Star Peru Purchased - parked
30-Nov-09 30156 Boeing 737 (NG) 800 Winglets PK-GMD DAE Capital Garuda Indonesia Purchd - sale & lease-back on del
30-Nov-09 380 Bombardier (de Havilland) Dash 8 9-Apr-00 VH-QQH Skytrans Services Pty Ltd Skytrans Airlines Purchd - sale & lease-back - parked
30-Nov-09 902 Airbus A340 540 (RR) F-WWTJ Government of Tunisia Government of Tunisia Del pkd - purchase of used / demo. ac
30-Nov-09 1065 Airbus A330 340 (RR) VQ-BCU Aercap Ireland Ltd Aeroflot Russian Airlines Purchd - sale to S.P.C. by lessor on del
30-Nov-09 697 ATR ATR 72 14-May-01 EP-ATU Iran Aseman Airlines Iran Aseman Airlines Purchd off lease / fine term completed
1-Dec-09 UE-213 Hawker Beechcraft 1900 D N3199Q Skyline Enterprise Corp Skyline Enterprise Corp Purchased - parked
1-Dec-09 49281 Boeing (McDonnell-Douglas) MD-80 21-Mar-00 N503PT Allegiant Air Allegiant Air Purchased - parked
1-Dec-09 36027 Boeing 737 (NG) BBJ1 M-YBBJ Hamilton Jets Ltd Hamilton Jets Ltd Purchased
1-Dec-09 14501069 Embraer ERJ-135 Legacy 600 N975GR Corporate AirSearch Intl Inc Corporate AirSearch Intl Inc Purchased
1-Dec-09 BC-789B Fairchild (Swearingen) Metro III EC-ITP Ibertour Air Services Ibertour Air Services Purchased - parked
1-Dec-09 4128 Airbus A320 210 (CFM) D-ABFB BOC Aviation airberlin Purchd - sale & lease-back on del
2-Dec-09 3952 Airbus A320 210 (CFM) F-WWBI 320 Soccia SAS CCM Airlines Purchd - sale & lease-back - pkd
2-Dec-09 49950 Boeing (McDonnell-Douglas) MD-80 83 (MDC) N347BF Jetran LLC Jetran International Ltd Purchased - parked
2-Dec-09 53198 Boeing (McDonnell-Douglas) MD-80 83 (MDC) N198MD Jetran LLC Jetran International Ltd Purchased - parked
2-Dec-09 14501105 Embraer ERJ-135 Legacy 600 N818HR HR INV LLC HR INV LLC Del - purchase of used / demo. ac
3-Dec-09 46917 Boeing (McDonnell-Douglas) DC-10 30F (M) (MD-10) N303WL Intl Trading Company of Yukon Inc Intl Trading Company of Yukon Inc Purchased - parked
3-Dec-09 47928 Boeing (McDonnell-Douglas) DC-10 30F (M) N304WL Intl Trading Company of Yukon Inc Intl Trading Company of Yukon Inc Purchased - parked
3-Dec-09 19000287 Embraer 190 AR N985TA Airlease Thirty Ltd TACA International Airlines Purchd - sale & lease-back on del
3-Dec-09 27748 Boeing 767 300ERF (GE) N322UP UPS Airlines UPS Airlines Purchd off lease / fin term completed
3-Dec-09 31081 Boeing 737 (NG) 800 Winglets N816NN NAS Investments 10 LLC American Airlines Purchd - sale & lease-back on del
3-Dec-09 23436 Boeing 767 300 (GE) 5N- Tradecraft Nigeria Ltd Tradecraft Nigeria Ltd Purchased - parked
4-Dec-09 24618 Boeing 767 200ER (P&W) N985AN AWAS 24618 Trust AWAS Purchased - parked
4-Dec-09 UE-43 Hawker Beechcraft 1900 D HK- Aerolet Aerolet Purchased
4-Dec-09 26 A.S.T.A. (GAF) Nomad N22B N5190Y Undisclosed Bank / Broker / Lessor North London Parachute Centre Purchd - sale & lease-back - prk
4-Dec-09 159 A.S.T.A. (GAF) Nomad N22S N6302W Undisclosed Bank / Broker / Lessor North London Parachute Centre Purchased - sale & lease-back
4-Dec-09 UE-132 Hawker Beechcraft 1900 D ZS-SNK Allegiance Aircraft Pty Allegiance Aircraft Pty Purchased
4-Dec-09 238 CASA 212 18-Jul-00 N422CA Bering Air Bering Air Purchased
4-Dec-09 24835 Boeing 767 200ER (P&W) N986AN AWAS 24835 Trust AWAS Purchased - parked
5-Dec-09 49853 Boeing (McDonnell-Douglas) MD-80 82 (SAIC) N853JF AOGLINE.com Inc AOGLINE.com Inc Purchased - parked
7-Dec-09 E2210 BAE SYSTEMS (HS) 146 18-Jul-00 PK-BRF Aviastar Mandiri Aviastar Mandiri Purchased
7-Dec-09 1073 Airbus A330 240 (RR) N973AV Aircastle Investment Holdings 3 Ltd Avianca Purchd - sale to S.P.C. by lessor on del
7-Dec-09 721 Bombardier (de Havilland) DHC-6 TO 26-Oct-00 N149WJ CAAMS Inc CAAMS Inc Purchd - pkd
7-Dec-09 1076 Airbus A330 240 (RR) N283AY GAIF II Investment Sixty-Three LLC US Airways Purchd - sale & lease-back on del
7-Dec-09 49972 Boeing (McDonnell-Douglas) MD-80 82 (MDC) N972AG Odoacer Aviation Ltd Odoacer Aviation Ltd Purchased - parked
7-Dec-09 40236 Boeing 737 (NG) 800 Winglets A6-FDF General Electric Capital Corp FlyDubai Purchd - sale & lease-back on del
8-Dec-09 4127 Airbus A319 110 (CFM) N412MX Aircraft Lease Securitisation II Ltd Mexicana Securitized
8-Dec-09 UE-139 Hawker Beechcraft 1900 D N139ZV Alpine Air Express Alpine Air Express Purchased - parked
8-Dec-09 24296 Boeing 737 (CFMI) 26-Oct-00 N294AG AAG XVIII LLC Aurora Aviation Group Purchased - parked
8-Dec-09 99 Saab 340 A C6-SBE Advanced Aviation Ltd Advanced Aviation Ltd Purchased - parked
8-Dec-09 49 Saab 2000 AEW 10-049 Pakistan Air Force Pakistan Air Force Purchased
8-Dec-09 8174 Fairchild/Dornier 228 18-Jul-00 RP-C Unconfirmed Philippine Airline Unconfirmed Philippine Airline Purchased - parked
8-Dec-09 14500854 Embraer ERJ-135 Legacy 600 G-HUBY London Executive Aviation London Executive Aviation Purchased
9-Dec-09 1012 Lockheed L-188 Electra AF N5507 Rockland Aerospace Rockland Aerospace Purchased - parked
9-Dec-09 22431 Boeing 737 (JT8D) 200 Ad (Stg 3 Hks) N787WH Blair Investors Corp Blair Investors Corp Purchased
9-Dec-09 29663 Boeing 737 (NG) 800 Winglets N Bcock & Brown Ac Mgmt LLC Bcock & Brown Ac Mgmt LLC Purchased
10-Dec-09 1072 Airbus A330 340 (RR) VQ-BCV Aercap Ireland Ltd Aeroflot Russian Airlines Purchd - sale to S.P.C. by lessor on del
10-Dec-09 4109 Airbus A320 230 (IAE) HA-LPY Bcock & Brown Ac Mgmt LLC Wizz Air Purchd - sale & lease-back on del
10-Dec-09 3171 Fairchild/Dornier 328JET N328DA Comtran International Inc Comtran International Inc Purchased - parked
10-Dec-09 4275 Bombardier (de Havilland) Dash 8 3-Feb-01 VH-QOU QF Dash 8 Leasing No 4 Pty Ltd Sunstate Airlines Purchd - sale & lease-back on del
10-Dec-09 24603 Boeing 757 200 Winglets (RR) N645AA Global Principal Finance Company LLC American Airlines Purchased - sale & lease-back
10-Dec-09 163 BAE SYSTEMS (BAC) One-Eleven 400 (Stg 2 Hks) N111JX Northrop Grumman Systems Corp Northrop Grumman Systems Corp Purchased - parked
11-Dec-09 25300 Boeing 757 200 Winglets (RR) N666A GA Telesis B757 Msn 25300 LLC American Airlines Purchd - sale & lease-back
11-Dec-09 49421 Boeing (McDonnell-Douglas) MD-80 82 (MDC) SE-DFU SAS Sweden AB SAS Purchd - subject to existing lease - pkd
11-Dec-09 19000248 Embraer 190 LR XA-JAC Jetscape Inc Aeromexico Connect Purchd - sale & lease-back on del
11-Dec-09 19000326 Embraer 190 ST PH-EZK HSH Global Aircraft Fund 1 KLM cityhopper Purchd - sale & lease-back on del
12-Dec-09 E2079 BAE SYSTEMS (HS) 146 18-Jul-00 G-MIMA Testeroco Tourism Enterprise Ltd Casino Rodos Purchd - sale & lease-back - pkd
12-Dec-09 7 Airbus A380 860 (EA) A6-EDF Emirates Airline Emirates Airline De - purchase of used / demo. aircraft
14-Dec-09 23370 Boeing 737 (CFMI) 26-Oct-00 N12319 Polaris Leasing International Inc Continental Airlines Purchd - sale & lease-back - parked
14-Dec-09 23841 Boeing 737 (CFMI) 26-Oct-00 N19357 Continental Airlines Continental Airlines Purchd off lease / fin term com - pkd
14-Dec-09 36159 Boeing 777 300ER (GE) B-KPM BOC Aviation Cathay Pacific Purchd - sale & lease-back on del
14-Dec-09 669 Airbus A310 320 (P&W) D- Unconfirmed German Operator Unconfirmed German Operator Purchased - parked
14-Dec-09 19000082 Embraer 190 AR N274JB SAL Investments 2 LLC JetBlue Airways Purchd - subject to existing lease
14-Dec-09 23862 Boeing 737 (CFMI) 26-Oct-00 N527AU Airwork Airwork Purchased - parked
14-Dec-09 23862 Boeing 737 (CFMI) 26-Oct-00 N527AU Aurora Leasing Inc Aurora Leasing Inc Purchased - parked
14-Dec-09 30910 Boeing 737 (NG) 800 Winglets N818NN NAS Investments 10 LLC American Airlines Purchd - sale & lease-back on del
15-Dec-09 29652 Boeing 737 (NG) 800 Winglets Aviation Capital Group Aviation Capital Group Purchased
15-Dec-09 126 General Dynamics (Convair) 580 (SCD) VH-PDX Pionair Australia Pionair Australia Purchased - parked
15-Dec-09 392 Bombardier (de Havilland) Dash 8 9-Apr-00 N828EX Skytrans Airlines Skytrans Airlines Purchased - parked
15-Dec-09 860 BAE SYSTEMS (Jetstream) Jetstream 31 Super EP PH- AIS Airlines AIS Airlines Purchased - parked
15-Dec-09 49608 Boeing (McDonnell-Douglas) MD-80 27-Mar-00 LN-ROZ SAS SAS Purchd off lease / fin term com - pkd
15-Dec-09 137 General Dynamics (Convair) 580 VH-PDL Pionair Australia Pionair Australia Purchased - parked
15-Dec-09 888 ATR ATR 72 14-May-01 F-OIXL La Financiere Pass SAS Air Caraibes Purchd - sale & lease-back on del
15-Dec-09 49437 Boeing (McDonnell-Douglas) MD-80 82 (MDC) SE-DMI SAS Sweden AB SAS Purchd - subject to existing lease - pkd
15-Dec-09 86 General Dynamics (Convair) 580 (SCD) VH-PDW Pionair Australia Pionair Australia Purchased - parked
15-Dec-09 53302 Boeing (McDonnell-Douglas) MD-80 21-Mar-00 JA8557 JALUX Inc JALUX Inc Purchased - parked
15-Dec-09 392 Bombardier (de Havilland) Dash 8 9-Apr-00 N828EX Key Equipment Finance Key Equipment Finance Purchased - parked

60| Airline Fleet Management


FACTS & FIGURES Fleet finance, firm orders, aircraft transactions, list prices and lease rates

Aircraft transactions 21st Oct 2009 11th Jan 2010 continued


Contract Owner Operator Event
Date S/N A/C Model Variant Reg No Name Name Remarks
15-Dec-09 7439 Bombardier (Canadair) CRJ Regional Jet 200LR 9XR-WA RwandAir RwandAir Purchased
15-Dec-09 11500 Fokker 100 PH-MJR Mass Holding NV Mass Jet Lease BV Purchased - parked
15-Dec-09 47084 Boeing (McDonnell-Douglas) DC-9 32PC (M) (Stg 3 Hk) N988AX First Class Aircraft Repair Inc First Class Aircraft Repair Inc Purchased - parked
15-Dec-09 451 Bombardier (de Havilland) Dash 8 26-Oct-00 C-GAPW ComAirTrading Inc ComAirTrading Inc Purchased - parked
15-Dec-09 47760 Boeing (McDonnell-Douglas) DC-9 41PC (M) (Stg 3 Hk) N958AX First Class Aircraft Repair Inc First Class Aircraft Repair Inc Purchased - parked
15-Dec-09 916 BAE SYSTEMS (Jetstream) Jetstream 31 Super EP PH- AIS Airlines AIS Airlines Purchased - parked
15-Dec-09 48426 Boeing (McDonnell-Douglas) MD-11 Freighter (M)
(ex Combi) (GE) N986AR AWAS 48426 Trust TradeWinds Airlines Purchd - subject to existing lease
15-Dec-09 53348 Boeing (McDonnell-Douglas) MD-80 27-Mar-00 OY-KHW SAS SAS Purchd off lease / fin term com - pkd
15-Dec-09 UE-7 Hawker Beechcraft 1900 D ZS-OYA Cem Air Cem Air Purchased
15-Dec-09 47176 Boeing (McDonnell-Douglas) DC-9 32PC (M) (Stg 3 Hks) N980AX First Class Aircraft Repair Inc First Class Aircraft Repair Inc Purchased - parked
15-Dec-09 49610 Boeing (McDonnell-Douglas) MD-80 27-Mar-00 LN-RMK SAS SAS Purchd off lease / fin term com - pkd
15-Dec-09 47781 Boeing (McDonnell-Douglas) DC-9 41PC (M) (Stg 3 Hks) N964AX First Class Aircraft Repair Inc First Class Aircraft Repair Inc Purchased - parked
15-Dec-09 53465 Boeing (McDonnell-Douglas) MD-80 83 (MDC) UR-CHM Khors Air Khors Air Purchased - parked
15-Dec-09 49612 Boeing (McDonnell-Douglas) MD-80 27-Mar-00 LN-RMH SAS SAS Purchd off lease / fin term com - pkd
16-Dec-09 11487 Fokker 100 F-GPXA Aircraft Financing and Trading BV Aircraft Financing and Trading BV Purchased - parked
16-Dec-09 E2074 BAE SYSTEMS (HS) 146 18-Jul-00 ZS-PUZ Airlink - SA Airlink Airlink - SA Airlink Purchd off lease / fin term com
16-Dec-09 851 ATR ATR 72 14-May-01 OH-ATL Undisclosed Bank / Broker / Lessor FinnComm Airlines Purchd - sale & lease-back on del
16-Dec-09 AC-678 Fairchild (Swearingen) Metro III N363AE CRI International Inc CRI International Inc Purchased
16-Dec-09 E3125 BAE SYSTEMS (HS) 146 26-Oct-00 G-UKSC Trident Aviation Leasing Services (Jersey) Ltd BAE SYSTEMS Reg Ac Asset Mgmt Purchd - subject to existing lease - pkd
16-Dec-09 11487 Fokker 100 EP-SUS Naft Airlines Naft Airlines Purchased - parked
16-Dec-09 4137 Airbus A320 210 (CFM) F-GKXZ Celestial Aviation Trading 46 Ltd Air France Purchd - sale to S.P.C. by lessor on del
17-Dec-09 UE-124 Hawker Beechcraft 1900 D N124YV TKC Aerospace TKC Aerospace Purchased - parked
17-Dec-09 UE-124 Hawker Beechcraft 1900 D N124YV US Department of State US Department of State Purchased - parked
17-Dec-09 30157 Boeing 737 (NG) 800 Winglets PK-GME DAE Capital Garuda Indonesia Purchd - sale & lease-back on del
17-Dec-09 877 Airbus A320 230 (IAE) EI-ELG ILFC Ireland Ltd ILFC Purchased - parked
17-Dec-09 25157 Boeing 757 200 (P&W) N537UA V30U-757x2 LLC United Airlines Purchased - sale & lease-back
17-Dec-09 25323 Boeing 757 200 Winglets (P&W) N545UA Tennenbaum Opportunities
Partners V LP & Special v United Airlines Purchased - sale & lease-back
17-Dec-09 4277 Bombardier (de Havilland) Dash 8 3-Feb-01 VH-QOV QF Dash 8 Leasing No 4 Pty Ltd Sunstate Airlines Purchd - sale & lease-back on del
17-Dec-09 405 ATR ATR 72 28-Jul-00 N640AS Air Contractors Air Contractors Purchased - parked
17-Dec-09 4139 Airbus A320 210 (CFM) F-HEPA Celestial Aviation Trading 46 Ltd Air France Purchd - sale to S.P.C. by lessor on del
18-Dec-09 49422 Boeing (McDonnell-Douglas) MD-80 82 (MDC) LN-ROT SAS Norge AS SAS Purchd - subject to existing lease
18-Dec-09 49613 Boeing (McDonnell-Douglas) MD-80 82 (MDC) OY-KHG SAS Denmark A/S SAS Purchd - subject to existing lease
18-Dec-09 49604 Boeing (McDonnell-Douglas) MD-80 82 (MDC) OY-KHE SAS Denmark A/S SAS Purchd - subject to existing lease
18-Dec-09 49380 Boeing (McDonnell-Douglas) MD-80 82 (MDC) OY-KGT SAS Denmark A/S SAS Purchd - subject to existing lease
18-Dec-09 53365 Boeing (McDonnell-Douglas) MD-80 82 (MDC) LN-RMR SAS Norge AS SAS Purchd - subject to existing lease
18-Dec-09 49385 Boeing (McDonnell-Douglas) MD-80 82 (MDC) SE-DFT SAS Sweden AB SAS Purchd - subject to existing lease - pkd
18-Dec-09 762 Airbus A300 620R (P&W) EP-SIF Saha Air Saha Air Purchased - parked
18-Dec-09 49382 Boeing (McDonnell-Douglas) MD-80 82 (MDC) LN-RLE SAS Norge AS SAS Purchd - subject to existing lease
18-Dec-09 49381 Boeing (McDonnell-Douglas) MD-80 82 (MDC) OY-KGZ SAS Denmark A/S SAS Purchd off lease / fin term com - pkd
18-Dec-09 4145 Airbus A320 210 (CFM) CS-TNV Aircraft Lease Securitisation II Ltd TAP Portugal Securitized
18-Dec-09 53368 Boeing (McDonnell-Douglas) MD-80 82 (MDC) LN-RMS SAS Norge AS SAS Purchd - subject to existing lease
18-Dec-09 53000 Boeing (McDonnell-Douglas) MD-80 82 (MDC) OY-KHN SAS Denmark A/S SAS Purchd - subject to existing lease - pkd
18-Dec-09 53275 Boeing (McDonnell-Douglas) MD-80 82 (MDC) OY-KHR SAS Denmark A/S SAS Purchd - subject to existing lease - pkd
18-Dec-09 49603 Boeing (McDonnell-Douglas) MD-80 82 (MDC) LN-ROX SAS Norge AS SAS Purchd - subject to existing lease
18-Dec-09 49384 Boeing (McDonnell-Douglas) MD-80 82 (MDC) LN-ROP SAS Norge AS SAS Purchd - subject to existing lease
18-Dec-09 23140 Boeing 767 200PC (GE) N790AX Undisclosed Bank / Broker / Lessor ABX Air Purchd - subject to existing lease
18-Dec-09 53001 Boeing (McDonnell-Douglas) MD-80 82 (MDC) LN-RMT SAS Norge AS SAS Purchd - subject to existing lease
18-Dec-09 379 ATR ATR 72 28-Jul-00 N379FA Business Aviation Services Inc Business Aviation Services Inc Purchased - parked
18-Dec-09 49383 Boeing (McDonnell-Douglas) MD-80 82 (MDC) LN-RLF SAS Norge AS SAS Purchd - subject to existing lease
18-Dec-09 49436 Boeing (McDonnell-Douglas) MD-80 82 (MDC) OY-KHC SAS Denmark A/S SAS Purchd - subject to existing lease
18-Dec-09 779 Bombardier (de Hav) DHC-6 TO 26-Oct-00 C-GMKW 2225692 Ontario Inc 2225692 Ontario Inc Purchased - parked
19-Dec-09 7846 Bombardier (Canadair) CRJ R Jet Challenger 800 N500PR Penske Jet Inc Penske Jet Inc Purchd off lease / fin term com
19-Dec-09 27 Airbus A380 840 (RR) VH-OQE QF ECA 2008-2 Pty Limited Qantas Purchd - sale & lease-back on del
21-Dec-09 20545 Boeing 727 200F (M) (Raisbeck
Stage 3 System) N723CK Kalitta Charters II LLC Kalitta Charters II LLC Purchd off lease / fin term completed
21-Dec-09 20948 Boeing 727 200F(M)Adv(Stg3Hk) N722CK Kalitta Charters II LLC Kalitta Charters II LLC Purchd off lease / fin term completed
21-Dec-09 186 Airbus A340 310 (CFM) F-GLZJ Air France Air France Purchd off lease / fin term completed
21-Dec-09 23068 Boeing 747 300 (P&W) N818SA Southern Air Southern Air Purchased - parked
21-Dec-09 571 Bombardier (de Hav) DHC-6 TO 26-Oct-00 C-FKBX Seaplane Holdings AS Kenn Borek Air Purchased - sale & lease-back
21-Dec-09 20383 Boeing 727 200F (M) (Raisbeck
Stage 3 System) N724CK Kalitta Charters II LLC Kalitta Charters II LLC Purchd off lease / fin term completed
21-Dec-09 21298 Boeing 727 200F (M) Adv (Raisbeck
Stage 3 System) N720CK Kalitta Charters II LLC Kalitta Charters II LLC Purchd off lease / fin term completed
21-Dec-09 49424 Boeing (McDonnell-Douglas) MD-80 82 (MDC) SE-DFX SAS Sweden AB SAS Purchd - subject to existing lease - pkd
21-Dec-09 2010 Lockheed L-188 Electra PF N2RK Undisclosed Bank / Broker / Lessor Undisclosed Bank / Broker / Lessor Purchased - parked
21-Dec-09 25156 Boeing 757 200 (P&W) N536UA Undisclosed Bank / Broker / Lessor United Airlines Purchased - sale & lease-back
21-Dec-09 36608 Boeing 737 (NG) 800 Winglets VH-VUT Pacific Triangle Leasing Ltd Virgin Blue Airlines Purchd - sale & lease-back on del
21-Dec-09 47086 Boeing (McDonnell-Douglas) DC-9 15RC (Stg 3 Hks) N915CK Kalitta Charters II LLC Kalitta Charters II LLC Purchd - subject to existing lease
22-Dec-09 24977 Boeing 757 200 (P&W) N524UA Undisclosed Bank / Broker / Lessor United Airlines Purchd - sale & lease-back
22-Dec-09 872 Airbus A300 620R Freighter (P&W) N140MN Fly High Ltd Fly High Ltd Purchased - parked
22-Dec-09 53302 Boeing (McDonnell-Douglas) MD-80 21-Mar-00 N504PT Sunrise Asset Management LLC Allegiant Air Purchased - parked
22-Dec-09 49615 Boeing (McDonnell-Douglas) MD-80 82 (MDC) SE-DID SAS Sweden AB SAS Purchd - subject to existing lease - pkd
22-Dec-09 53008 Boeing (McDonnell-Douglas) MD-80 82 (MDC) SE-DIY SAS Sweden AB SAS Purchd - subject to existing lease - pkd
22-Dec-09 49420 Boeing (McDonnell-Douglas) MD-80 82 (MDC) OY-KGY SAS Denmark A/S SAS Purchd - subject to existing lease - pkd
22-Dec-09 23 Airbus A380 860 (EA) A6-EDG Doric Sechste GmbH & Co KG Emirates Airline Purchd - sale & lease-back on del
23-Dec-09 2054 BAE SYSTEMS (HS) ATP Bulk Freighter G-MANC European Turboprop Mgmt AB European Turboprop Mgmt AB Purchased - parked
23-Dec-09 30140 Boeing 737 (NG) 800 Winglets PK-GMF DAE Capital Garuda Indonesia Purchd - sale & lease-back on del
23-Dec-09 49438 Boeing (McDonnell-Douglas) MD-80 82 (MDC) SE-DFY SAS Sweden AB SAS Purchd - subject to existing lease - pkd
23-Dec-09 46067 Boeing (McDonnell-Douglas) DC-8 72 N274AT Undisclosed Bank / Broker / Lessor Undisclosed Bank / Broker / Lessor Purchased - parked
23-Dec-09 2051 BAE SYSTEMS (HS) ATP Bulk Freighter G-OBWP European Turboprop Mgmt AB European Turboprop Mgmt AB Purchased - parked
23-Dec-09 2042 BAE SYSTEMS (HS) ATP Bulk Freighter G-BTPL European Turboprop Mgmnt AB European Turboprop Mgmt AB Purchased - parked
23-Dec-09 25368 Boeing 757 200 (P&W) N547UA Undisclosed Bank / Broker / Lessor United Airlines Purchased - sale & lease-back
23-Dec-09 53347 Boeing (McDonnell-Douglas) MD-80 82 (MDC) SE-DMD SAS Sweden AB SAS Purchd - subject to existing lease - pkd
23-Dec-09 7363 Bombardier (Canadair) CRJ R Jet 200LR N113MN EDC Lease Finance Trust No.3 Avmax Intl Aircraft Leasing Inc Purchd - subject to existing lease - pkd
23-Dec-09 36003 Boeing 777 200LRF (GE) D-AALC DCM GmbH & Co Flugzeugfonds 3 KG AeroLogic Purchd - sale & lease-back on del
24-Dec-09 49937 Boeing (McDonnell-Douglas) MD-80 83 (MDC) (Stg 4 ready)S2- United Airways Bangladesh United Airways Bangladesh Purchased

Airline Fleet Management |61


FACTS & FIGURES Fleet finance, firm orders, aircraft transactions, list prices and lease rates

Aircraft transactions 21st Oct 2009 11th Jan 2010 continued


Contract Owner Operator Event
Date S/N A/C Model Variant Reg No Name Name Remarks
24-Dec-09 49620 Boeing (McDonnell-Douglas) MD-80 83 (MDC) N620MD Jetran LLC Jetran International Ltd Purchased - parked
24-Dec-09 49791 Boeing (McDonnell-Douglas) MD-80 83 (MDC) N791MD Jetran LLC Jetran International Ltd Purchased - parked
24-Dec-09 7379 Bombardier (Canadair) CRJ Regional Jet 200LR N115MN EDC Lease Finance Trust No.3 Avmax Intl Aircraft Leasing Inc Purchd - subject to existing lease - pkd
26-Dec-09 113 Airbus A320 230 (IAE) XY-AGI Myanmar Airways International Myanmar Airways InternationalPurchased
26-Dec-09 416 ATR ATR 72 200 F-WNUH ATR ATR Purchased - parked
28-Dec-09 36165 Boeing 777 300ER (GE) B-KPN BOC Aviation Cathay Pacific Purchd - sale & lease-back on del
28-Dec-09 22812 Boeing 757 200SF (P&W) N605DL Cargo Aircraft Management Inc Capital Cargo International Airlines Purchd - subject to existing lease
28-Dec-09 22910 Boeing 757 200SF (P&W) N620DL Cargo Aircraft Management Inc Capital Cargo International Airlines Purchased - subject to existing lease
29-Dec-09 1066 Lockheed L-1011 TriStar 50 N700TS Save A Connie Inc Save A Connie Inc Purchased - parked
30-Dec-09 22225 Boeing 767 200SF (GE) N748AX Cargo Aircraft Management Inc Amerijet International Purchd - subject to existing lease
30-Dec-09 22315 Boeing 767 200SF (GE) N312AA Cargo Aircraft Management Inc ABX Air Purchd - subject to existing lease
30-Dec-09 46129 Boeing (McDonnell-Douglas) DC-8 62CF (Stg 3 Hks) N41CX Cargo Aircraft Management Inc ATI - Air Transport International Purchd - subject to existing lease
30-Dec-09 359 Airbus A310 200F (GE) N411FE FedEx FedEx Purchased - parked
30-Dec-09 2052 BAE SYSTEMS (HS) ATP Bulk Freighter G-BUKJ Regional One Inc Regional One Inc Purchased - parked
30-Dec-09 215 ATR ATR 72 200 C-FULE Calm Air Calm Air Purchased - parked
30-Dec-09 22318 Boeing 767 200SF (GE) N761CX Cargo Aircraft Management Inc Qantas Purchd - subject to existing lease
30-Dec-09 378 Bombardier (de Havilland) Dash 8 100 LN-WIU Wideroe Wideroe Purchased
30-Dec-09 23143 Boeing 767 200SF (GE) N793AX Cargo Aircraft Management Inc ABX Air Purchd - subject to existing lease
30-Dec-09 36004 Boeing 777 200LRF (GE) D-AALD DCM GmbH & Co Flugzeugfonds 3 KG AeroLogic Purchd - sale & lease-back on del
2-Jan-10 545 Bombardier (de Havilland) Dash 8 300 TR-CLB Air Affaires Gabon Air Affaires Gabon Purchased
4-Jan-10 53366 Boeing (McDonnell-Douglas) MD-80 82 (MDC) SE-DME SAS Sweden AB SAS Purchd - subject to existing lease - pkd
5-Jan-10 UE-213 Hawker Beechcraft 1900 D HK- Aerolet Aerolet Purchased - parked
5-Jan-10 UE-2 Hawker Beechcraft 1900 D C6- Sky Bahamas Sky Bahamas Purchd off lease / fin term com
5-Jan-10 23321 Boeing 757 200 (RR) N901AW Undisclosed Bank / Broker / Lessor US Airways Purchased - sale & lease-back
6-Jan-10 28032 Boeing 747 400F (P&W) A6-GGP Dubai Air Wing Dubai Air Wing Purchased
6-Jan-10 4017 Bombardier (de Havilland) Dash 8 400 HB-JQA M1 Commercial Jets Ltd Baboo Purchd - subject to existing lease
7-Jan-10 261 Airbus A300 B4-200F (GE) N261AX Undisclosed Bank / Broker / Lessor Undisclosed Bank / Broker / Lessor Purchased - parked
8-Jan-10 894 ATR ATR 72 500 SE-MDC Erik Thun AB Golden Air Purchd - sale & lease-back on del
8-Jan-10 29 Airbus A380 840 (RR) VH-OQF QF ECA 2008-2 Pty Limited Qantas Purchd - sale & lease-back on del
Data supplied courtesy of Ascend Online Fleets / Ascend V1 database

Firm orders 21st Oct 2009 to 11th Jan 2010


Mfr & Type Variant Customer Order Order/ Number Engines at Order Variant at delivery Engines at delivery
date TypeSwap
Airbus A319 100 (Engines Unannounced) Turkish Airlines (THY) 30-Dec-09 Order 6 Unannounced-Unannounced 100 (Engines Unannounced) Unannounced-Unannounced
Airbus A319 130 (IAE) LAN Airlines 23-Dec-09 Order 12 V2500-2524-A5SelectOne 130 (IAE) V2500-2524-A5SelectOne
Airbus A319 130 (IAE) Middle East Airlines 30-Nov-09 Order 1 V2500-2524-A5SelectOne 130 (IAE) V2500-2524-A5SelectOne
Airbus A319 CJ (CFM) Comlux Aviation 16-Nov-09 Order 1 CFM56-5B7/3 CJ (CFM) CFM56-5B7/3
Airbus A320 200 (Engines Unannounced) Unannounced commercial customer 30-Nov-09 Order 52 Unannounced-Unannounced 200 (Engines Unannounced) Unannounced-Unannounced
Airbus A320 210 (CFM) GECAS 15-Nov-09 Type Swap 4 CFM56-5B4/3 210 (CFM) CFM56-5B4/3
Airbus A320 230 (IAE) IndiGo Airlines 15-Nov-09 Type Swap 30 V2500-2527-A5SelectOne 230 (IAE) V2500-2527-A5SelectOne
Airbus A320 230 (IAE) LAN Airlines 23-Dec-09 Order 18 V2500-2527E-A5SelectOne 230 (IAE) V2500-2527E-A5SelectOne
Airbus A321 200 (Engines Unannounced) Turkish Airlines (THY) 30-Dec-09 Order 14 Unannounced-Unannounced 200 (Engines Unannounced) Unannounced-Unannounced
Airbus A330 200F (RR) Turkish Airlines (THY) 24-Nov-09 Order 2 Trent-772B-60EP 200F (RR) Trent-772B-60EP
Airbus A330 340 (RR) Turkish Airlines (THY) 6-Nov-09 Order 3 Trent-772B-60EP 340 (RR) Trent-772B-60EP
Airbus A330 340 (RR) Virgin Atlantic Airways 30-Dec-09 Order 6 Trent-772B-60EP 340 (RR) Trent-772B-60EP
Airbus A340 540 (RR) Government of Tunisia 30-Nov-09 Order 1 Trent-556-61 540 (RR) Trent-556-61
Airbus A350 900XWB (RR) Ethiopian Airlines 15-Nov-09 Order 12 Trent-XWB 900XWB (RR) Trent-XWB
Airbus A380 860 (EA) Air Austral 17-Nov-09 Order 2 GP7200-7270 860 (EA) GP7200-7270
ATR ATR 72 500 Air Algerie 7-Dec-09 Order 4 PW100-127M 500 PW100-127M
ATR ATR 72 500 Air Caraibes 1-Dec-09 Order 1 PW100-127M 500 PW100-127M
ATR ATR 72 500 Arkia 1-Dec-09 Order 1 PW100-127M 500 PW100-127M
ATR ATR 72 500 Golden Air 1-Jan-10 Order 1 PW100-127M 500 PW100-127M
ATR ATR 72 500 Wings Air 16-Nov-09 Order 5 PW100-127M 500 PW100-127M
Boeing (Mc-D) C-17 A Royal Air Force 4-Jan-10 Order 1 PW2000-2040 A PW2000-2040
Boeing (Mc-D) C-17 A United Arab Emirates Air Force 6-Jan-10 Order 6 PW2000-2040 A PW2000-2040
Boeing 737 (NG) 700 IGW QC US Air Force 18-Dec-09 Order 1 CFM56-7B20/3 700 IGW QC CFM56-7B20/3
Boeing 737 (NG) 700 IGW QC Winglets US Navy 14-Dec-09 Order 1 CFM56-7B20/3 700 IGW QC Winglets CFM56-7B20/3
Boeing 737 (NG) 700 Winglets Unannounced commercial customer 23-Dec-09 Order 4 CFM56-7B24/3 700 Winglets CFM56-7B24/3
Boeing 737 (NG) 800 Winglets Air Algerie 19-Nov-09 Order 7 CFM56-7B24/3 800 Winglets CFM56-7B24/3
Boeing 737 (NG) 800 Winglets Air Austral 15-Dec-09 Order 2 CFM56-7B26/3 800 Winglets CFM56-7B26/3
Boeing 737 (NG) 800 Winglets COPA Airlines 30-Nov-09 Order 2 CFM56-7B26/3 800 Winglets CFM56-7B26/3
Boeing 737 (NG) 800 Winglets Norwegian Air Shuttle 22-Oct-09 Order 6 CFM56-7B26/3 800 Winglets CFM56-7B26/3
Boeing 737 (NG) 800 Winglets Tassili Airlines 26-Oct-09 Order 4 CFM56-7B26/3 800 Winglets CFM56-7B26/3
Boeing 737 (NG) 800 Winglets Unannounced commercial customer 18-Dec-09 Order 24 CFM56-7B26/3 800 Winglets CFM56-7B26/3
Boeing 747 8I (GE) Korean Air 7-Dec-09 Order 5 GEnx-2B67 8I (GE) GEnx-2B67
Boeing 767 300ER (GE) ANA - All Nippon Airways 21-Dec-09 Order 5 CF6-80C2B6F 300ER (GE) CF6-80C2B6F
Boeing 777 200ER (P&W) ANA - All Nippon Airways 21-Dec-09 Order 5 PW4000-4090 200ER (P&W) PW4000-4090
Boeing 777 300ER (GE) Unannounced non-commercial customer 15-Dec-09 Order 2 GE90-115B 300ER (GE) GE90-115B
Boeing 787 8 (Engines Unannounced) Unannounced commercial customer 22-Dec-09 Order 10 Unannounced-Unannounced 8 (Engines Unannounced) Unannounced-Unannounced
Boeing 787 9 (RR) Unannounced commercial customer 21-Dec-09 Order 1 Trent-1000-K2 9 (RR) Trent-1000-K2
Bombardier (Canadair)
CL-415 Government of Newfoundland & Labrador 28-Oct-09 Order 4 PW100-123AF PW100-123AF
Bombardier (Canadair)
CRJ Regional Jet Challenger 850 Qatar Executive 11-Nov-09 Order 2 CF34-3B1 Challenger 850 CF34-3B1
Bombardier (Canadair)
CRJ700 Regional Jet 701ER American Eagle Airlines 3-Dec-09 Order 22 CF34-8C1 701ER CF34-8C1
Embraer 175 LR Oman Air 17-Nov-09 Order 5 CF34-8E5 LR CF34-8E5
Embraer 190 LR airberlin 25-Nov-09 Order 2 CF34-10E5A1 LR CF34-10E5A1

62| Airline Fleet Management


FACTS & FIGURES Fleet finance, firm orders, aircraft transactions, list prices and lease rates

Stored Aircraft 11th Jan 2010


Mfr & type Fleet Stored Total Fleet Fleet Stored % Seats Stored Total Seats Seats Stored%

Boeing (McDonnell-Douglas) MD-11 14 193 7.25 574 7470 7.68


Boeing 707 38 203 18.72 1704 5900 28.88
Boeing 717 19 155 12.26 1964 17716 11.09
Boeing 737 (CFMI) 325 1855 17.52 41420 236323 17.53
Bombardier (Canadair) 580 2 3 66.67 0 0 0
Embraer 170 1 172 0.58 76 12468 0.61
Embraer EMB-110 Bandeirante 51 267 19.1 686 1788 38.37
Embraer EMB-120 Brasilia 62 274 22.63 1768 7351 24.05
Fokker 100 52 255 20.39 4897 25044 19.55
Gulfstream Aerospace Gulfstream I 16 51 31.37 105 389 26.99
Gulfstream Aerospace Mallard - 5 0 0 69 0
Lockheed Galaxy 1 111 0.9 0 0 0
Saab 340 96 410 23.41 3118 11931 26.13
BAE SYSTEMS (HS) 748 18 70 25.71 264 757 34.87
Boeing (McDonnell-Douglas) C-17 1 213 0.47 0 0 0
Boeing 720 - 1 0 0 0 0
Boeing 737 (NG) 53 3123 1.7 5106 475081 1.07
Boeing 787 - 2 0 0 40 0
Bombardier (Canadair) CL-415 - 65 0 0 0 0
Bombardier (Canadair) CRJ700 Regional Jet 1 312 0.32 70 21266 0.33
Bombardier (de Havilland) Dash 8 58 894 6.49 2678 45591 5.87
Bombardier (de Havilland) DHC-4A Turbo Caribou 1 1 100 0 0 0
Bombardier (Shorts) 330 2 48 4.17 0 240 0
Bombardier (Shorts) SC.5 Belfast 1 1 100 0 0 0
Embraer 195 - 48 0 0 5552 0
Embraer ERJ-145 40 686 5.83 1966 33486 5.87
Fokker 50 28 190 14.74 1296 8546 15.16
Israel Aerospace Industries Arava 15 73 20.55 19 116 16.38
Lockheed L-1011 TriStar 42 56 75 8805 11095 79.36
Lockheed L-188 Electra 2 16 12.5 0 0 0
Scaled Composites 348 White Knight Two - 1 0 0 0 0
Airbus A300 74 387 19.12 14056 43176 32.56
Airbus A310 39 202 19.31 5136 24679 20.81
Airbus A319 20 1219 1.64 1414 157416 0.9
Airbus A320 79 2192 3.6 12886 349098 3.69
Airbus A330 21 662 3.17 5425 181540 2.99
Airbus A400M - 1 0 0 0 0
ATR ATR 42 35 353 9.92 1475 13690 10.77
ATR ATR 72 44 445 9.89 2882 27497 10.48
BAE SYSTEMS (Avro) RJ Avroliner 24 163 14.72 2110 14905 14.16
BAE SYSTEMS (Jetstream) Jetstream (HP/Scottish) - 8 0 0 0 0
BAE SYSTEMS (Jetstream) Jetstream 31 74 258 28.68 1241 4492 27.63
Boeing (McDonnell-Douglas) DC-3 12 74 16.22 419 2726 15.37
Boeing (McDonnell-Douglas) DC-8 74 136 54.41 118 215 54.88
Boeing 737 (JT8D) 257 552 46.56 27700 55217 50.17
Bombardier (Canadair) CRJ900 Regional Jet 12 230 5.22 1052 18651 5.64
Bombardier (de Havilland) DHC-6 Twin Otter 54 558 9.68 957 8478 11.29
Bombardier (Shorts) 360 15 106 14.15 378 1144 33.04
Embraer 190 1 270 0.37 19 26317 0.07
Embraer ERJ-135 64 293 21.84 2102 6870 30.6
Fokker F.27 48 148 32.43 1250 3926 31.84
Kawasaki Heavy Industries P-1 - 2 0 0 0 0
Saab 2000 8 58 13.79 394 2786 14.14
Scaled Composites 318 White Knight One - 1 0 0 0 0
Airbus A318 3 70 4.29 51 6861 0.74
Airbus A321 8 574 1.39 1501 107827 1.39
Airbus A340 30 370 8.11 7643 98750 7.74
Airbus A380 1 28 3.57 474 12418 3.82
BAE SYSTEMS (BAC) One-Eleven 12 28 42.86 407 1197 34
BAE SYSTEMS (BAC) VC10 - 15 0 0 1325 0
BAE SYSTEMS (HS) 146 73 176 41.48 6395 13036 49.06
BAE SYSTEMS (HS) ATP 13 54 24.07 260 716 36.31
BAE SYSTEMS (Jetstream) Jetstream 41 19 93 20.43 531 2582 20.57
Boeing (McDonnell-Douglas) DC-10 52 224 23.21 7303 11873 61.51
Boeing (McDonnell-Douglas) DC-9 194 363 53.44 11973 26615 44.99
Boeing (McDonnell-Douglas) MD-80 310 980 31.63 44717 141159 31.68
Boeing (McDonnell-Douglas) MD-90 6 108 5.56 977 16055 6.09
Boeing 727 182 486 37.45 10212 19028 53.67
Boeing 747 198 989 20.02 33503 219523 15.26
Boeing 757 104 1022 10.18 19057 163171 11.68
Boeing 767 100 929 10.76 19529 179821 10.86
Boeing 777 4 834 0.48 919 251776 0.37
Bombardier (Canadair) CL-215 - 16 0 0 0 0
Bombardier (Canadair) CRJ Regional Jet 91 1051 8.66 4092 49863 8.21
Bombardier (Canadair) CRJ1000 Regional Jet - 2 0 0 20 0
Bombardier (de Havilland) Dash 7 9 66 13.64 398 2768 14.38
Bombardier (de Havilland) DHC-5 Buffalo 13 54 24.07 0 38 0
Bombardier (Shorts) SC.7 Skyvan 14 70 20 110 183 60.11
Embraer 175 3 126 2.38 225 10078 2.23
Embraer ERJ-140 - 75 0 0 3300 0
Fokker 60 4 4 100 272 272 100
Fokker 70 5 47 10.64 321 3533 9.09
Fokker F.28 47 97 48.45 3023 6138 49.25
Harbin Embraer Aircraft Industry ERJ-145 - 33 0 0 1650 0
Hawker Beechcraft 1900 54 628 8.6 985 9980 9.87
Hawker Beechcraft 99 6 152 3.95 44 295 14.92
Indonesian Aerospace CN-235 9 50 18 286 478 59.83
Lockheed Hercules 177 1551 11.41 47 274 17.15
NAMC YS-11 9 41 21.95 275 399 68.92
Transall C-160 - 4 0 0 0 0

Airline Fleet Management |63


FACTS & FIGURES Fleet finance, firm orders, aircraft transactions, list prices and lease rates

List prices and lease rates


Average CMV Dry Lease Rate Seating*
(Typical C+Y)
Manufacturer List Price Type Oldest Newest %Change Oldest Newest %Change
Airbus A300-600R $7.50m $15.50m -16.2% $0.100m $0.180m -21.7% 267
Airbus A310-200 $2.20m $2.20m -21.4% $0.070m $0.070m -6.7% 240
Airbus A310-300 $5.00m $10.00m -19.9% $0.120m $0.160m -12.7% 240
Airbus $59.10m A318-100 $16.00m $27.60m -0.9% $0.165m $0.245m 0.0% 100
Airbus $70.30m A319-100 $13.70m $31.30m -2.2% $0.150m $0.285m 0.0% 124
Airbus $76.90m A320-200 $6.80m $37.80m -4.3% $0.100m $0.325m 0.0% 150
Airbus A321-100 $13.15m $20.10m -16.9% $0.158m $0.195m 0.0% 185
Airbus $90.30m A321-200 $20.40m $42.20m -9.2% $0.220m $0.380m 0.0% 185
Airbus $180.90m A330-200 $43.50m $79.30m -5.4% $0.400m $0.700m 0.0% 250
Airbus $200.80m A330-300 $29.50m $86.50m -1.8% $0.340m $0.700m 0.0% 269
Airbus A340-200 $26.00m $27.25m -8.9% $0.360m $0.405m 0.0% 250
Airbus $215.50m A340-300 $26.00m $82.25m -4.8% $0.370m $0.760m 0.0% 269
Airbus $237.10m A340-500 $64.00m $101.00m -3.2% $0.590m $0.840m 0.0% 258
Airbus $249.40m A340-600 $68.00m $114.00m -4.1% $0.640m $0.930m 0.0% 322
Airbus $169.30m A350-800 250
Airbus $188.15m A350-900 280
Airbus $327.40m A380-800 $152.00m $182.00m -3.6% $1.500m $1.700m 0.0% 555
Boeing B717-200 $9.00m $14.50m 0.0% $0.120m $0.170m 0.0% 117
Boeing B737-300 $2.50m $9.00m -1.4% $0.060m $0.100m -10.4% 134
Boeing B737-400 $5.50m $10.00m -4.8% $0.095m $0.130m -6.1% 144
Boeing B737-500 $4.00m $8.80m -13.5% $0.065m $0.085m -8.8% 104
Boeing $53.50m B737-600 $12.70m $21.45m -7.2% $0.170m $0.235m 0.0% 103
Boeing $62.30m B737-700 $16.80m $32.65m -2.0% $0.180m $0.290m 0.0% 134
Boeing $74.50m B737-800 $20.70m $39.20m -2.7% $0.220m $0.340m 0.0% 154
Boeing B737-900 $22.00m $28.75m -9.2% $0.210m $0.260m 0.0% 172
Boeing B747-400 $20.00m $73.50m -12.5% $0.380m $0.750m -9.3% 347
Boeing B757-200 $6.00m $20.00m -7.9% $0.115m $0.210m -6.4% 188
Boeing B767-200ER $4.50m $15.00m -17.5% $0.160m $0.250m -13.9% 158
Boeing $149.25m B767-300ER $10.50m $58.00m -3.7% $0.200m $0.500m -5.0% 190
Boeing B777-200 $27.00m $46.75m -16.3% $0.425m $0.525m 0.0% 313
Boeing $212.50m B777-200ER $49.90m $115.15m -5.6% $0.600m $0.970m 0.0% 313
Boeing $243.80m B777-200LR $95.00m $136.00m -2.9% $0.840m $1.020m 0.0% 313
Boeing B777-300 $48.00m $74.75m -6.5% $0.620m $0.800m 0.0% 382
Boeing $264.50m B777-300ER $85.20m $136.20m -3.0% $0.870m $1.235m 0.0% 350
Boeing $162.00m B787-8 220
Boeing McDonnell Douglas MD-11 $14.60m $17.40m 0.0% $0.250m $0.250m 0.0% 285
Boeing McDonnell Douglas MD-81 $0.50m $1.00m -11.5% $0.025m $0.030m -7.1% 144
Boeing McDonnell Douglas MD-82 $1.00m $2.50m -8.3% $0.025m $0.045m -9.1% 144
Boeing McDonnell Douglas MD-83 $2.00m $3.80m -17.0% $0.040m $0.060m -7.1% 144
Boeing McDonnell Douglas MD-87 $2.50m $2.50m -10.7% $0.030m $0.030m -14.3% 109
Boeing McDonnell Douglas MD-88 $2.10m $3.20m -15.9% $0.040m $0.050m -13.9% 144
Boeing McDonnell Douglas MD-90 $6.00m $6.00m 0.0% $0.090m $0.090m 0.0% 144
Bombardier (Canadair) CRJ-100/200 $4.50m $11.20m 0.0% $0.045m $0.100m -13.3% 50
Bombardier (Canadair) $29.50m CRJ-700/705 $11.30m $21.85m -2.3% $0.130m $0.200m 0.0% 70
Bombardier (Canadair) $33.90m CRJ-900 $14.70m $25.05m -0.6% $0.160m $0.240m 0.0% 86
Bombardier $14.70m Q200 $3.60m $8.95m -7.6% $0.050m $0.080m 0.0% 37
Bombardier $15.70m Q300 $3.50m $15.50m -1.7% $0.055m $0.135m 0.0% 50
Bombardier $25.00m Q400 $8.40m $17.95m -4.0% $0.115m $0.185m -3.4% 70
Embraer $17.67m ERJ-135ER $4.40m $6.30m -11.4% $0.050m $0.070m 0.0% 37
Embraer $25.04m ERJ-145ER $5.50m $10.15m -10.8% $0.055m $0.120m 0.0% 50
Embraer $29.47m E170 LR $14.60m $22.70m -1.2% $0.150m $0.220m 0.0% 70
Embraer $31.71m E175 LR $16.50m $24.10m -1.1% $0.165m $0.225m 0.0% 82
Embraer $35.12m E190 LR $20.50m $27.50m -0.7% $0.200m $0.245m 0.0% 100
Embraer $37.09m E195 LR $22.10m $29.10m -1.1% $0.215m $0.260m 0.0% 108
Fokker Fokker 70 $4.00m $4.00m 0.0% $0.060m $0.060m -33.3% 80
Fokker Fokker 100 $3.50m $4.60m -3.8% $0.060m $0.090m -9.8% 108
ATR $15.20m 42-500 $5.80m $14.50m -3.5% $0.070m $0.125m -3.7% 48
ATR $18.80m 72-500 $5.40m $17.50m -1.5% $0.070m $0.165m -4.8% 70
Data supplied courtesy of Ascend Online Fleets / Ascend V1 database.

Worldwide fleet summary by region Oct 2009 to Dec 2010


Region Net Delivered Leased Purchased Fleet as of
Orders 2nd hand 6th Jan 2010
Undisclosed orders 57 2 0 3 18
South America 50 21 28 49 2,853
Australia 20 27 36 23 1,845
Far East 15 87 54 35 4,968
Middle East 12 38 32 19 1,833
Africa 34 10 29 29 2,415
Central America 2 4 14 21 989
Caribbean 2 5 3 18 303
USA 36 161 154 431 15,857
Canada 4 8 18 39 1,777
Europe 12 105 114 128 7,744
Total 40,602
Source: OAG Fleet iNET, 6 January, 2010

64| Airline Fleet Management


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