Peter Chang took the helm at CDB Aviation Lease Finance last month with a vision to build a global leasing platform based in China.
Parent company China Development Bank Financial Leasing (CDB Leasing) had gone public on the Hong Kong Stock Exchange in July 2016. That same month, its aircraft-leasing unit CDB Aviation Lease Finance was registered in Ireland, with $55 million in registered capital.
CDB Leasing has operated with an international mandate for nearly 10 years, but less than 50% of its aircraft fleet is leased to airlines outside China.
In addition to assembling an experienced marketing team, Chang's vision for his company becoming a major player in the aircraft leasing space includes exploiting the comparative advantages that having a rich, large parent offers.
"I was a natural bridge for them," says Chang, who replaced Donal Boylan in the job. "This is not going to be a Chinese lessor but rather a global platform. I'm here to build that platform."
CDB Leasing manages 164 aircraft, Flight Fleets Analyzer indicates. Beyond the Chinese airlines, its customers include Air France, IndiGo, Volaris, Singapore Airlines and Emirates.
In order to compete with the established lessors and truly go global, CDB Aviation Lease Finance naturally needs to hire in talent, and challenges lie in attracting that talent. "The Chinese have started to get used to the compensation levels in our business," says Chang.
Just after Chang's recruitment came the announcement that Freshfields' Rob Murphy and Avolon's Pat Hannigan would join CDB Aviation Lease Finance in 2017. Murphy will serve as general counsel and chief operating officer, and Hannigan as chief commercial officer.
John Cunningham is meanwhile taking over as senior vice-president for the Asia-Pacific region. He held roles at GECAS for 16 years and served as chief executive of Air Capital Trust in Singapore.
"The only way I know how to build this company is to hire seasoned, strong and well-recognised people who have deep relationships," says Chang, who confirms that he will continue to add to the team.
CDB will look to expand the fleet through purchasing portfolios rather platforms.
"We're going to grow organically because that's what we have done," says Chang. "We will have a very analytical, rational, disciplined but aggressive growth plan."
Without committing to a precise timeframe, Chang says he will grow the company from $10 billion to $40 billion "over a certain period".
The lessor will have a four-pronged approach to fleet expansion through sale-and-leasebacks, aircraft trading, mergers and acquisitions, and direct orders with the manufacturers. The company has an orderbook with Boeing for 30 737NGs, deliveries of which began last year.
They are part of a 2015 deal with Boeing in which Chinese companies ordered 300 jets, worth some $38 billion, from the US manufacturer. The agreement envisions an aircraft assembly plant in China.
The lessor also has 30 Airbus narrowbodies on order, including Ceos and Neos.
While widebodies appear to be falling out of favour, Chang says they have to be a part of a lessor's menu. As asset prices fall, it is likely CDB will look to pick up some widebodies at attractive prices.
"Without widebodies you're missing out a big part of the customer base. If you want to be a full-service lessor to tap into all the potential of the marketplace, you have to have widebodies."
Orders will be a major driver of growth for the company, but purchasing will be disciplined and rational.
"If the manufacturers would think of a way to resolve the escalation issue, I could place an order for 1,000 planes," says Chang.
Having a parent with deep pockets will be a benefit for CDB Aviation Lease Finance, one not accessible to most leasing companies, he argues.
"We are formidable not only in the low cost of funding but also in that we have reliable source of funding."
China Development Bank is committed to aviation, Chang stresses. He says the bank will offer additional products or services as part of a cross-selling technique to offer customers a wide array of funding solutions.
For instance, as part of a sale-and-leaseback package, the lessor and its parent could work together to offer pre-delivery payment funding.
Chinese lessors have been criticised for lack of experience, overpaying for assets and incomplete leases, so Chang may face an uphill battle to convince the market of CDB Aviation Lease Finance's credibility. But the man at the helm is confident that with the right team and its parent's commitment, the company will be a competitive force that grows a loyal customer base.
"The ideal scenario is that customers work with us without CDB Aviation having to answer RFPs," says Chang.
Source: Cirium Dashboard
