Hainan looks to buy more aircraft leasing assets beyond Allco

Sydney
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Hong Kong Aviation Company (HKAC), a consortium that includes Hainan Airlines (HNA) Group and Bravia Capital Partners, is in advanced discussions with lessors to build its leasing platform beyond the newly acquired Allco aviation business.

"We are in the second round of discussions on all three lessor portfolios currently for sale in the market," says Bharat Bhise, CEO of Bravia Capital Partners and special advisor to HKAC.

He adds: "Allco's existing portfolio and the expertise of the management team, together with the financial resources of the HNA Group, provide us with an excellent platform upon which to grow and develop into a major international aviation leasing business."

The financier has committed financial support from Chinese banks including the Agricultural Bank of China and the China Development Bank. Bhise says HKAC has $2 billion in financing available in 2010, but says "some of that money" may be used to pay down existing lenders.

HKAC has closed 18 aircraft transactions exclusively in China, but Bhise says discussions are currently underway with airlines in Germany and India.

In July, HKAC announced $1 billion in aircraft deals. Previously, the financier had only completed a few sale and leasebacks on engines.

The first transaction included the pre-delivery payments as well as the long-term lease financing for three new Airbus A330-300 aircraft on lease to Hong Kong Airlines. The deliveries are scheduled for this year and in 2011. Financing was provided by China Development Bank.

The other transaction included the sale and leaseback of ten new ERJ 190 aircraft to Tianjin Airlines. The deliveries are scheduled through 2011. Financing for this transaction was provided by China Ex-IM Bank.

In both deals, HNA Group and its affiliates provided equity; however, Bravia Capital Partners will have an equity position post-closing as well.

HKAC's employees currently total 27 but the financier hopes to builds its staff by five by year-end.