Home' Asian Aviation : AAV_Nov 2012 Contents AsianAviation | NOVEMBER 2012 21
is right - if someone gave me a big discount. Yes, I'll
take a risk on that. That's the time you get in. Back in
January 2009, we committed to buy our first two 777
freighters - because the price was right. We put them
on long-term leases to Air France. We're very pleased."
On the 787 and A350, Martin is again playing a
waiting game. "The 787 rolled out in 2007. It's now
2012. This has definitely had its fair share of issues
not just with the airframe but also with engines."
He says, "Whenever new technology comes in
there is a risk. Our approach is don't invest until
you've seen them fly - in hindsight the right approach.
I think once we get to the 787-9 this will be a good
product." This will avoid the teething problems on the
way in, he says. "Again, as an investment, the key is
to get in at the right price."
The A350 has one advantage over the 787 - a
single engine choice as opposed to two. "For a lessor
this is quite significant. You don't want a segmented
marketplace if you can avoid it."
But he remains cautious. "Again I think we're
going to see some delays. I do wonder, with the
787 it's pretty clear the -9 will be the most popular
product eventually. In the case of the A350 I think
the jury is still out which will be the most successful
product in the family. We're taking our time looking
at that product."
In any case, BOC Aviation will again be looking
for back-to-back deals. "There are a lot of airlines
with orders and there are opportunities for sale-and-
leaseback." Given the extra risk with a widebody,
you want to fix your purchase price and a long-term
lease at the same time, he explains.
BOC Aviation has also recently moved into the
regional jet market - very much at the bottom end of
its 100-seat plus range. In November last year, the
lessor placed an order for 15 Embraer E190s for
delivery from the fourth quarter of this year through
to 2014. On top of this, a sale and leaseback for four
E195s for Brazilian carrier Azul on long-term leases
has also been agreed.
Of the 15 E190s ordered, six have already
been placed with Air Astana, TUI Travels' Belgian
subsidiary Jetairfly and Azul. All of its Embraer
customers are new customers for BOC Aviation.
"As we grow we need some diversification of our
portfolio. What attracted us to the E190 is the single
engine type, a good operator base - and a global
operator base. And new airline customers which
diversifies our portfolio," notes Martin
BOC Aviation has a total of six A320s and nine
E190s to place left to place. "So we're sitting thinking
what next," says Martin. The order book at the start
of the year was 70 and the lessor will have finished
taking all deliveries by 2014. It also has 25 sale and
leaseback commitments for the next three years.
"We're looking to top up. We tend to be counter
cyclical and look for opportunities. We're beginning
to think about that now. But we're not in a hurry - I've
learnt that patience is a virtue," says Martin.
On the Bombardier C-series, Martin says. "We've
looked at it - the problem is there are no core
customers yet." There will be support for China's
COMAC, however. "There is a relationship at group
level," explains Martin. The lessor has ten units on
order, with ten options. "But even the terms aren't
fixed yet, and we've said we won't until we see it fly."
Martin does see some potential risks ahead. "We
do need to watch the BRIC countries carefully - they
have been growing very fast and are not immune to
inflation or foreign exchange issues." The son of a
farmer, he is keeping a careful eye on agricultural
prices, which have been going up significantly. "At
some point it can have an impact on our business."
While for the US and Europe he is not worried
about inflation for the next year or two, given the
weak economic backdrop, "for the rest of the world
I am absolutely worried."
He also keeps an eye on airlines that may be
growing too fast. "When I look at Airbus and Boeing
monthly deliveries, I want to know who the top ten
are. If guys are consistently taking four planes a
month, starting from a low base - sometimes that
can tell you they're growing too fast."
But there are also plenty of opportunities. "With
Asian bond markets, we've only just seen the tip
of this," he says, noting there are some very strong
companies in the aviation supply chain, including
Asian airlines, OEMs, operating lessors, MRO
providers and airports. "These are huge companies
in their own right - all of these are ways for people
to get exposure to the aviation industry as a whole.
We don't sell ourselves well enough as an industry.
People always think - airlines bad. We have to change
"If you've got second hand A319s or
737-700s, less people want them,"
BOC AVIATION FLEET
CURRENT OWNED MANAGED ON ORDER
Boeing 737 Classic
Boeing 737 Next-Generation
Boeing 747 Freighter
Boeing 777 Family
Source: BOC Aviation
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