Asian Global Aviation Hegemony As reported by ExitHub earlier this year, more than a dozen entities were invited to submit bids for CIT’s aircraft leasing business, with a preponderance of Asian bidders, given the growing Asian demand and shifting balance of the global aviation industry to Asia. As airlines serving Asia Pacific are attempting to expand their fleets, they’re finding that the leasing business can be more lucrative than operating an airline. The move comes after BOC Aviation Ltd. (HKG: 2588), an arm of Bank of China, the country’s fourth-largest lender by assets, made a $1 billion IPO in Hong Kong for its aircraft leasing business, BOC shares began trading on June 1. BOC Aviation was the second aircraft leasing company listed in Asia after China Aircraft Leasing Group (CALC) floated its shares in Hong Kong two years ago. BOC Aviation’s fleet is nearly four times bigger than CALC’s though, at almost 230 planes. Malaysian low-cost airline AirAsia Berhad (MYX: 5099) is also planning to divest ts aircraft leasing subsidiary Asia Aviation Capital Ltd., while rivals CDB Leasing and Minsheng Financial Leasing, where reportedly preparing to list in Hong Kong later this year. The CIT Group CIT Commercial Air owns, finances and manages a fleet of more than 350 commercial aircraft serving approximately 100 customers in 50 countries. The company offers an array of industry-leading services, supported by a fleet of Airbus, Boeing, Embraer and Bombardier aircraft. CIT has seven aircraft leasing, advising and syndication offices in Dublin, Ireland; Ft. Lauderdale, Fla.; Los Angeles, Calif.; New York, N.Y.; Seattle, Wash.; Singapore; and Toulouse, France. Founded in 1908, CIT is a financial holding company with more than $65 billion in assets. Its principal bank subsidiary CIT Bank NA, has more than $30 billion of deposits and more than $40 billion of assets. It provides financing, leasing and advisory services principally to middle market companies across more than 30 industries primarily in North America, and equipment financing and leasing solutions to the transportation sector. It also offers products and services to consumers through its Internet bank franchise and a network of retail branches in Southern California, operating as OneWest Bank, a division of CIT Bank. The company is headquartered in Livingston, N.J. CIT has received a “non-objection” from the Federal Reserve Bank of New York for its Amended Capital Plan subject to the closing of the transaction. The Amended Capital Plan authorizes CIT to return $2.975 billion of common equity to shareholders from the net proceeds of the sale; return up to an additional $0.325 billion of common equity contingent upon the issuance of a similar amount of Tier 1 qualifying preferred stock; and pay common dividends totaling $64 million per year after the transaction is completed, subject to quarterly approval by the CIT Board of Directors. “The sale of CIT Commercial Air represents an important milestone for CIT and follows an extensive dual-track process that was designed to maximize shareholder value. This transaction will strengthen our balance sheet, simplify our business and enable us to return significant capital to our shareholders,” said Ellen R. Alemany, chairwoman and chief executive of CIT Group. “We are making meaningful progress on our strategy to create a leading national middle-market bank.” HNA Group HNA, a leader in aviation and tourism, was founded in 1993 by Chen Feng. Over the past two decades, it has grown from a local aviation transportation operator into a multinational conglomerate encompassing Aviation, Holdings, Tourism, Capital, Logistics and EcoTech. Prior to founding HNA, Chen Feng served as an aviation advisor to the governor of Hainan Province, and presided over the formation and subsequent restructuring of Hainan Airlines. He also created and served as chairman of Grand China Air Co. to hold the airline assets of the HNA Group. During China’s Cultural Revolution, he reportedly worked for the People’s Liberation Army Air Force, and after 1979, he worked at China’s Civil Aviation Administration, and the National Air Regulations Bureau. In 1984, he graduated from the Lufthansa College of Air Transportation Management in Germany. In 1995, he obtained an MBA degree from the Maastricht School of Management in the Netherlands, and in 2004 he obtained a diploma from Harvard Business School. Feng was born in Huozhou, Shanxi province and raised in Beijing. HNA Group aspires to become one of the top 50 companies in the world by 2030, it says. In 2015, HNA had revenues of nearly RMB190 billion ($28.6 billion), total assets of over RMB 600 billion ($90 billion) and employed nearly 180,000 employees worldwide. HNA is headquartered in Haikou, Hainan, China. Yesterday, HNA EcoTech said it agreed to acquire Beijing-based information technology (IT) outsourcing services provider Pactera Technology International Ltd. from New York global private equity firm Blackstone Group (NYSE: BX) and other shareholders. The purchase price was reportedly $675 million. In early August, HNA Group agreed to invest $336 million in San Francisco-based RocketSpace, a leading technology accelerator campus and co-working space for high-growth startup, in a strategic joint venture deal to fuel RocketSpace’s global expansion, including China. A few days later, HNA’s subsidiary Hainan Airlines Co. Ltd. acquired a 24% stake in Brazil’s third largest airline Azul SA for $450 million, becoming its largest single shareholder. In February, HNA agreed to acquire Ingram Micro Inc. (NYSE:IM) for $6 billion, the largest Chinese takeover of a US information technology company. Photo: Chen Feng, Founder & Chairman of HNA Group.]]>
HNA agreed to acquire Ingram Micro Inc. (NYSE:IM) for $6 billion, the largest Chinese takeover of a US information technology company. This week, HNA Group agreed to invest $336 million in San Francisco-based RocketSpace, a leading technology accelerator campus and co-working space for high-growth startup, in a strategic joint venture deal to fuel RocketSpace’s global expansion, including China. Photo: David Neeleman, Founder & CEO of Azul Brazilian Airlines.]]>
Reuters reported on Aug. 4.
Malaysian low-cost airline AirAsia Berhad (MYX: 5099) reportedly received an offer valued at $1 billion for its aircraft-leasing business, according to CEO Tony Fernandes. AirAsia plans to divest its aircraft leasing subsidiary Asia Aviation Capital Ltd, Fernandes told Bloomberg TV during an interview at the end of May. The move comes a day after CIT Group Inc. (NYSE: CIT), a leading US provider of commercial lending and leasing services, was said to be speeding up the sale process of its own CIT Aerospace global commercial air business, to advance the company’s strategic initiatives first announced by its former chairman and CEO John A. Thain, upon his retirement on October 21, 2015. Moreover, BOC Aviation, an arm of Bank of China, the country’s fourth-largest lender by assets, launched an initial public offering in Hong Kong for its aircraft leasing business, targeting HK$8.7 billion ($1.13 billion) from the sale of both new and existing shares, FinanceAsia reported. BOC International and Goldman Sachs are the joint sponsors of the IPO. Similar to other recent billion-dollar IPOs in Hong Kong, BOC Aviation has lined up local and foreign cornerstone investors to subscribe for $583 million, or 52% of the deal before the order book was opened to public institutional and retail investors BOC Aviation will be the second aircraft leasing company listed in Asia after China Aircraft Leasing Group (CALC) floated its shares in Hong Kong two years ago, says FinanceAsia. BOC Aviation’s fleet is nearly four times bigger than CALC’s though, at almost 230 planes, while its expected market capitalization is over six times greater. BOC Aviation is a leading global aircraft operating leasing company and the largest aircraft operating leasing company headquartered in Asia, as measured by the value of owned aircraft. BOC Aviation has delivered 22 years of unbroken profitability, with a portfolio of owned aircraft has an average age of less than four years, weighted by net book value, making it one of the youngest in the aircraft operating lease industry. With shares scheduled to begin trading on June 1, BOC Aviation looks set to steal a march on rivals CDB Leasing and Minsheng Financial Leasing, which are both also preparing to list in Hong Kong later this year, FinanceAsia added. As airlines serving Asia Pacific are attempting to expand their fleets, they’re finding that the leasing business can be more lucrative than operating an airline, which has prompted conglomerates led by Hong Kong billionaires Li Ka-shing and Cheng Yu-tung to enter the industry, says Bloomberg. CIT Aerospace owns, finances and manages a fleet of more than 350 commercial aircraft serving approximately 100 customers in 50 countries. CIT Aerospace offers an array of industry-leading services, supported by our fleet of Airbus, Boeing, Embraer and Bombardier aircraft. CIT Aerospace has seven aircraft leasing, advising and syndication offices in Dublin, Ireland; Ft. Lauderdale, Fla.; Los Angeles, Calif.; New York, N.Y.; Seattle, Wash.; Singapore; and Toulouse, France. More than a dozen entities were invited to submit first-round bids for CIT Aerospace by next month. Given the growing Asian demand and shifting balance of the global aviation industry to Asia, a strong line-up of Chinese and Japanese suitors are expected to bid for the unit, including China’s HNA Group, Industrial and Commercial Bank of China’s ICBC Leasing, and Japan’s Orix Corp. AirAsia is engaged in the provision of air transportation services. The company’s segments include Malaysia, Thailand, Indonesia, Philippines, India and Japan. AirAsia was founded in 1993 by DRB-Hicom, a government-owned conglomerate, and began operations in 1996. In December 2001, the heavily-indebted airline was acquired by former Time Warner executive Tony Fernandes, though his company Tune Air Sdn Bhd, for a token sum of one ringgit (about USD 0.26 at the time), and the assumption of USD 11 million (MYR 40 million) in debts. In 2001 Fernandes started with 2 old aircraft, and turned the company around, generating a profit in 2002 and launching new routes from its hub in Kuala Lumpur, undercutting former monopoly operator Malaysia Airlines with promotional fares as low as MYR 1 (US$0.27). Born in the aftermath of 9/11 and coming through the global financial crisis, AirAsia has faced some of the most turbulent times in the airline industry. In 2003, AirAsia opened a second hub at Senai International Airport in Johor Bahru near Singapore and launched its first international flight to Bangkok. It subsequently started its Thai AirAsia affiliate, and began flights to Singapore and Indonesia, Macau, mainland China (Xiamen), the Philippines (Manila), Vietnam, Cambodia, Brunei and Myanmar, the latter by Thai AirAsia. the cairline kept growing by continuously adding new routes and aircraft. The company’s subsidiaries include AirAsia Investment Ltd, engaged in investment holdings; AirAsia Go Holiday Sdn Bhd, engaged in the tour operating business; AirAsia Corporate Services Ltd, which facilitates business transactions for AirAsia Group with non-resident goods and service providers; Ground Team Red Sdn Bhd, which provides special purpose vehicles for financing arrangements required by AirAsia; AirAsia (Mauritius) Ltd, which provides aircraft leasing facilities to Thai AirAsia Co. Ltd, and AirAsia Aviation Capital Ltd, which provides aircraft leasing services, among others. AirAsia is headquartered near Kuala Lumpur, Malaysia.]]>