Dubai Aerospace Enterprise buys 263-plane leasing firm

UAE aircraft lessor more than doubles its portfolio of planes to 394 with acquisition of Dublin-based AWAS to give it a fleet total value of US$14 billion.

A DAE ATR72-600. The company has acquired Dublin-based AWAS to give it a total mixed fleet of almost 400 planes. Courtesy Dubai Aerospace Enterprise

Dubai Aerospace Enterprise (DAE) will become a top 10 global aircraft leasing company following the acquisition of Dublin group AWAS. The terms of the transaction with Terra Firma Capital Partners, a UK-based private equity firm, and the Canada Pension Plan Investment Board, were not disclosed but it will be funded by DAE’s internal resources and committed debt financing. The deal is subject to required regulatory approvals and is expected to be completed in the third quarter.

“Our leasing business has been growing at a rapid clip and this [AWAS] acquisition will more than double the current size of our business, providing the necessary scale for DAE to best serve its customers,” said the DAE managing director Khalifa Al Daboos.

AWAS, which has 263 aircraft operating and on order, services 85 airline customers in more than 45 countries.

The combined company will have a fleet of 394 aircraft with a total value of more than US$14 billion. It will serve over 110 airline customers in over 55 countries from offices in Dubai, Ireland, Singapore and the United States.

“This combination results in a well-diversified portfolio with the ability to generate strong risk-adjusted returns,” said the DAE chief executive Firoz Tarapore.

DAE, whose majority shareholder is Investment Corporation of Dubai, said this month that while its revenue rose by 22 per cent last year to $417.8 million its net income fell 67 per cent compared to 2015, to $199m. In 2015, it sold the engineering services provider StandardAero to focus on its leasing business.

Last month, DAE said it completed the purchase of a portfolio of ATR 72-600 aircraft from GE Capital Aviation Services.

The Hong Kong-listed aircraft lessor BOC Aviation last month reported a record full-year net profit, providing a bullish outlook for the industry on the back of growing demand for air travel.

Global passenger traffic for February showed a second month of strong demand growth supported by lower fares and a healthier economic backdrop, the International Air Transport Association said this month.

Middle East carriers had the strongest growth, with a 9.5 per cent demand increase in February compared to a year ago.

However, the impact on demand has yet to be fully felt from the attempted US travel ban on Muslim-majority countries and restrictions on electronics carried on board flights from airports in the Gulf.

Emirates said it had begun to see a softening and has cut back on some of its services to the United States for the time being.

The DAE-AWAS deal follows the $10.38bn purchase by Dublin’s Avolon of the aircraft leasing business of the US-based CIT Group this month.

The deal effectively triples Avolon’s size, making it the third-largest aircraft leasing company in the world, with a combined fleet of 868 aircraft worth $43bn.

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