SMBC and Aeromexico agree sale and leaseback deal for 10 aircraft

Transaction is Irish lessor’s largest to date with the Mexican airline

Aeromexico is one of Dublin-based SMBC’s longest standing customers. Photograph: iStock

Aeromexico is one of Dublin-based SMBC’s longest standing customers. Photograph: iStock

 

Irish aircraft financier SMBC Aviation Capital will buy 10 Boeing 737s from Aeromexico and lease them back to the airline in its biggest ever deal with the central American carrier.

SMBC said that Boeing is due to deliver the 10 Boeing 737 Max craft, worth just over $1.1 billion (€930 million) according to the manufacturer’s prices, to Aeromexico between next year and 2020.

The deal covers eight Boeing 737 Max 8 craft and two 737 Max 9. Buyers rarely pay the full manufacturer’s list price for aircraft.

Peter Barrett, SMBC chief executive, noted that Aeromexico was one of the Irish company’s oldest customers.

“This is our single largest transaction with Aeromexico and is further evidence of our long-standing commitment to Aeromexico and the Mexican aviation market,” he said.

Andrés Conesa, Aeromexico’s chief executive, said that the airline intended adding up to 90 Boeing 737 Max’s to its fleet and up to 19 of the US manufacturer’s 787 Dreamliners.

Spreading cost

Sale and leaseback arrangements such as this are a common means of financing aircraft. The airlines agree to buy the craft from the manufacturer, but then sell them to a lessor, which leases them back the carrier.

This allows the airlines to spread the cost of acquiring the craft over time and to free up cash for other purposes.

Dublin-based SMBC is a leading aircraft lessor. The company buys planes using a combination of its own cash and debt, and leases them to 100 airlines in 42 countries. It owns or manages a 668 craft.

Aeromexico is Mexico’s biggest international airline. It operates mainly from its hub in Mexico City Airport and serves 80 destinations.

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