Abu Dhabi firm takes stake in aircraft leaser

ABU DHABI — An Abu Dhabi-based investment company said Monday it is taking a 20 percent stake in the global aircraft leasing firm AerCap Holdings in a deal valued at $380 million.

By (AP)

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Published: Mon 25 Oct 2010, 8:23 PM

Last updated: Mon 6 Apr 2015, 11:44 AM

The acquisition by Waha Capital, funded largely by shifting the firm’s stakes in existing airplanes, underscores Abu Dhabi’s ambitions to position itself as a Middle East aerospace hub while bulking up Dutch-based AerCap’s plane portfolio.

AerCap already had a 50-50 joint venture with Waha covering 47 existing Airbus A320 planes and an additional seven on order. Under the terms of Monday’s deal, Waha will transfer its stake in those aircraft to AerCap, which will own them outright.

In addition, Waha will hand over a 40 percent interest in 16 other jetliners it owns to be managed by AerCap. It will also pay AerCap $8 million in new funds and assume $97 million in liabilities.

Waha Chief Executive Salem al-Noaimi said that although the firm is giving up day-to-day management of the planes, the deal ups the ante in the aircraft leasing business.

“Abu Dhabi has a clear aerospace strategy. ... This is a development, or enhancement of that original strategy,” he told The Associated Press in the Emirati capital. “If we wanted to get out of aviation leasing, this is not what we would be doing.”

Aircraft leasing companies typically rent out planes to airlines on long-term contracts so carriers assume less risk and gain more flexibility over their fleets.

By investing directly in AerCap, Waha will be able to get exposure to and spread its risk over a wider range of customers while tapping into AerCap’s experienced management, Waha executives said.

Unlike several other state-linked investment firms based in the Emirati capital, Waha sells shares on the Abu Dhabi stock exchange.

AerCap, which last year acquired its Irish rival Genesis in a $1.75 billion deal, is listed on the New York Stock Exchange. It had 324 planes and 83 engines owned, on order or managed as of the end of last month.

Waha’s investment in the company will give the Abu Dhabi firm a similarly large stake to AerCap’s other top shareholder, private investment firm Cerberus Capital Management LP, said Aengus Kelly, the head of AerCap’s American operations, who is expected to be named the overall company’s new CEO next year.

AerCap also plans to open a regional hub in Abu Dhabi. Kelly said the Abu Dhabi office would allow AerCap to grow its customer base in the fast-growing Middle East market.

AerCap currently draws only a fraction of its business from the Middle East. Among its regional customers are Kuwait National Airways, Royal Jordanian and UAE discount carrier Air Arabia.

Gaining a big investor from the region could better position it to win leasing orders from fast-growing Gulf carriers such as Dubai’s Emirates, Qatar Airways or Abu Dhabi’s own Etihad Airways. Waha already has arranged a handful of leases for Emirates and Qatar Airways.

The deal also could strengthen Abu Dhabi’s role as an increasingly important player in the aerospace industry, a sector it has identified as a potential area of growth as it works to diversify its economy away from oil.

In recent years, Abu Dhabi government-linked companies have signed partnership deals with Airbus parent EADS, engine maker Rolls-Royce Group PLC and aircraft maintenance firm Sikorsky Aerospace Services.

Waha last week leased four Bombardier CRJ900 planes to SkyWest Inc., an regional airline that operates services for major U.S. airlines, including United and Delta. Al-Noaimi said those will be among the aircraft in which AerCap will acquire a 40 percent stake.

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