Avolon will have $2 billion to fund expansion

Aircraft lessor, Avolon, will have $2 billion to fund further expansion after its Chinese parent, Bohai, invests $1.2 billion in the Irish group.

Bohai bought Avolon for €2.38 billion earlier this month and it subsequently emerged that the Chinese company planned to provide it with $1.2 billion in equity funding.

Avolon confirmed on Tuesday that Bohai is investing $1.2 billion in the business, which will leave with total liquidity of $2 billion to “accelerate growth in 2016 and beyond”.

Following the merger with Bohai, Avolon took management of the group's Hong Kong Aviation Capital business, giving it a total fleet of more than 400 aircraft.

Avolon is now the core aircraft leasing business for Bohai, and its parent, aerospace giant, HNA. Taking all their interests together, the combined Irish and Chinese groups constitute the world’s fourth biggest aircraft lessor.

According to a quarterly update, Avolon delivered two aircraft in the final three months of 2015 and sold a further five.

Over the course of last year, Avolon delivered 32 new craft to 17 airlines in the 14 countries.

It signed new sale and lease-backs for 38 craft in 2015, of which 22 deliver in 2016 and 13 in 2017.

It replacedthree $125 million loans with an interest margin of 2 per cent with a single $525 million debt with a 1.75 per cent.

Commenting on the results, Avolon chief executive, Dómhnall Slattery, said that the group is entering 2016 as a substantially larger and stronger business.

“Bohai has now committed incremental equity of $1.2 billion to the business which provides us with total available liquidity of $2 billion to deliver on our ambitious growth objectives,” he said.

“Our target is to become a top three player in the global industry and we will achieve that through a combination of both organic and acquisition growth.”