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Leasing to Tehran

Avolon boss Domhnal Slattery has become the first major lessor to highlight the appeal of Iran as sanctions are lifted. “Iran, I think, will be a boom, a real opportunity for the lessors in the next couple of years,” the CEO of the Irish aircraft lessor said yesterday (August 5).

With an average age of 23 years, the Iranian fleet desperately needs replacement, and the country indicated this week that it wants around 90 new Boeing and Airbus aircraft each year.

Unfortunately delivery slots are booked up years in advance, with lessors accounting for about a fifth of the order backlog.

Avolon itself has 108 aircraft on order – mostly current and future generation narrowbodies – and will receive $1.6bn-worth of metal in 2016, though all its new aircraft are placed with operators until August 2018.

The Dublin-based company yesterday announced a 75 per cent increase in first-half profit, up to $105m, as takeover bids for the lessor intensified.

Bohai Leasing is slated to acquire 20 per cent of Avolon later this year, but may yet opt for a full acquisition to fend off a $30-per-share purchase offer from AVIC Capital, a division of China’s state-owned aircraft manufacturer.  

A deal with Bohai would secure a sale-and-leaseback deal for five 787-9s with Hainan Airlines, but AVIC could prove a useful partner for Iran, whose commercial airline sector has the potential to match Turkey’s, which counts 500 aircraft in service.

Never a fan of sanctions, China re-pledged billions of dollars to Iranian oilfields even before a deal on nuclear issues had been struck. And in 2014, in the expectation of sanctions relief, Iranian oil exports to China ballooned, piling the pressure on negotiators to reach an accord this year.

It will be interesting to see whether Chinese aircraft lessors, such as BOC Aviation, are as quick off the mark in the world’s newest market.

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