Irish aircraft lessor Avolon has ordered 90 new passenger jets estimated to be worth at least €12 billion from European giant Airbus as it bets that global demand for flying will keep gaining altitude.
Dublin-based Avolon, which buys aircraft from manufacturers and leases them to airlines, said profits grew 36 per cent to $143 million (€122 million) in the three months to June 30th.
The company confirmed that it had ordered 90 new aircraft from leading commercial jet manufacturer Airbus that will be delivered over the next eight years.
The order, for 75 A321 aircraft used for short-haul flying and 15 A330s, designed for long distances, is worth more than €12 billion based on prices published by Airbus.
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However, Avolon can negotiate significant discounts on those figures and does not comment on prices. Shareholders in its parent, China’s Bohai Leasing, must approve the deal.
Avolon continues to see strong growth in demand for flying around the world as more people in developing countries begin earning enough money to travel, according to its chief executive, Andy Cronin.
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“We believe that that will continue for the foreseeable future,” he said.
“Aviation has shown its resilience against multiple challenges in the last few years.”
Recent figures from the International Air Transport Association show travel demand is up almost 6 per cent this year.
Delays in getting critical parts for aircraft and other problems are hindering manufacturers such as Airbus’ and Boeing’s ability to keep up with demand.
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Mr Cronin acknowledged that this could affect the order’s schedule.
“I would be surprised at the end of eight years if everything runs perfectly on time. The world doesn’t work like that,” he said.
However, he explained that placing the order gave Avolon an advantage over rivals as it secured its place in the queue as aircraft become available.
Mr Cronin noted that both types of plane were in demand. “This demonstrates our confidence in the long-term demand for new aircraft,” he said in a statement.
Benoît de Saint-Exupéry, Airbus executive vice president, predicted that Avolon’s order would open new markets and add customers for both models.
Avolon expects airlines in Asia, India, Europe and North America to lease the new aircraft.
The company had agreed lease deals for 98 per cent of its current order book, including the 140 jets pledged from Airbus and Boeing in 2023, by the end of June.
Many of those jets went to Asian carriers, said its chief executive.
In Europe airlines are replacing older planes with newer, more fuel efficient and quieter models.
The order brings to more than 500 the total number of A320neo that Avolon owns, manages or has pledged to buy from Airbus.
At the end of June it owned, managed or had on order 1,116 aircraft, while it had 142 airline customers in 60 countries.
Meanwhile, Avolon is continuing with legal action against insurers who did not pay out after it lost aircraft leased to Russian airlines following the country’s invasion of Ukraine in 2022.
Mr Cronin said that the amount involved was not material. Insurers paid it $150 million last year, settling most of its claims.
Avolon said in 2022 that political risk deterred it from doing much business in Russia.
The Irish company buys aircraft from manufacturers with a combination of its own cash and borrowings.
It leases the planes to airlines, earning revenue from the rent they pay.
It had $8.8 billion in available debt and cash at the end of June.
