Lloyds Banking Group has narrowed the bidding process for the purchase of its 11-aircraft portfolio bids to two buyers from a shortlist of three financiers, say market sources.
A hedge fund and a private-equity firm, both US-based, are the final bidders, sources indicate.
A European aviation fund had been shortlisted with the other two parties, but dropped out in the final round as it did not view Lloyd's price expectation as "reasonable", says a source.
The portfolio includes three Boeing 737-900 aircraft on lease to KLM, one Airbus A321 on lease to Air France, an Airbus A320 with Monarch Airlines, a Boeing 737-700 with Scandinavian Airlines, an Airbus A319 with Brazilian carrier TAM, a 737-700 with GOL Linhas Aereas Inteligentes, two 737-700s with Turkish Airlines and a 737-700 with Shanghai Airlines, market sources say.
BOC Aviation has been mandated to handle the sale.
It is no secret that Lloyds has been trying to reduce its involvement in aviation during the past four years.
Lloyds sold $500 million in aircraft finance debt to Goldman Sachs in December 2012. The senior-secured aircraft deal is said to have been sold at 94 cents on the dollar, according to three sources.
Last year, the bank was rumoured to be close to entering a partnership with a financier on its aircraft portfolio, which consists of assets acquired under the Halifax Bank of Scotland takeover in September 2012. However due to difficult market conditions, the portfolio deal fell through, according to sources.
BOC Aviation and Lloyds were unavailable for comment at the time of press.