Leasing company looks to swell 85-strong narrowbody fleet and may include freighters

Boullioun Aviation Services has completed more than $2 billion worth of refinancing of its current portfolio of aircraft, allowing the US leasing company to consider ordering more aircraft next year. For the longer term, Boullioun is also looking to broaden out from its current fleet of narrowbody passenger aircraft to include freighters.

The Seattle-based company has privately placed a $950 million asset-backed structured financing transaction following agreement with 18 financial institutions for a $1.1 billion extension of bank financing. The two deals split and rebalance Boullioun's financing between German owners West LB and third-party banks, freeing up resources to expand.

"By getting third-party financing, we have the resources to continue to order aircraft," says chief operating officer John Willingham. Boullioun has rolling options on 28 Boeing Next Generation (NG) 737s and an undisclosed number of Airbus A320 family aircraft.

"We'll be looking next year to see if and when we'll exercise these and talking to manufacturers about what makes sense," Willingham adds.

Boullioun has 85 aircraft in its fleet, all narrowbody jets apart from three Boeing 767s. It has still to take delivery of 26 of 30 A320s and 12 of the 30 737NGs it last ordered, all of which will be completed by 2006.

The company plans to stick with a predominantly narrowbody fleet, and says lease rates for 737NGs and A320s continue to hold up after recovering from a post-11 September drop.

Less attractive is the larger Boeing 757, the value of which has tumbled in the last year. "The bad news is we've got two 757s; the good news is we've only got two," says Willingham. One of the 757s has just been replaced with an unidentified Asia-Pacific operator after being returned by bankrupt US operator National Airlines. Boullioun envisages eventually converting at least one of the 757s into a freighter.

Boullioun also has 41 earlier generation 737-300/400s. The company's long-term goal is to grow its portfolio to about 250 aircraft, but Willingham says this will be done "steadily and sensibly".

Source: Flight International