Leasing Firm Nears Decision in 100-Jet Deal
A Beverly Hills aircraft leasing firm said Monday that it is close to concluding a $4-billion-plus agreement to buy 100 airliners--either all from Boeing or a mix of McDonnell Douglas and Airbus Industrie planes.
International Lease Finance expects to announce its decision perhaps as soon as late next week, Executive Vice President Louis L. Gonda said. With options for the purchase of additional airliners, the order could total 120 planes.
The firm’s decision will determine whether it will continue to buy virtually all U.S.-made planes--from Seattle-based Boeing--or whether many will be foreign-built. Airbus is a European consortium headquartered in Toulouse, France. St. Louis-based McDonnell Douglas builds commercial airliners at its Douglas Aircraft plant in Long Beach.
It is unlikely the firm would divide the order among the three manufacturers, Gonda said, because aircraft builders offer deeper discounts for larger orders. The two largest aircraft orders to date--each for $4.1 billion--were placed by British Airways in August, 1986, and by Air France in December of last year, a Boeing spokesman said. Each airline ordered 16 747-400s with an option to buy another 12. Scheduled for initial delivery this December, the 747-400 is the world’s most expensive commercial airliner with a price tag of nearly $120 million.
Lease Instead of Buy
If International Lease chooses Boeing, the package would probably include the most advanced available models of the 737, 757 and 767 twin-jets and of the four-engine jumbo 747, Gonda said. But the profitable leasing company, which earned $51.2 million last year on sales of $180 million, is also considering the purchase of McDonnell’s MD-11, MD-80 and MD-90 series planes together with Airbus’ A-310, A-320, A-330 and A-340.
The planes are for delivery between 1991 and 1995. International Lease already has 65 jets leased to 30 airlines, and plans to own 152 airliners by 1990.
Since its founding by Gonda and two other Hungarian immigrants in 1973, the company has leased more than 200 Boeing jets and a dozen McDonnell planes. But last year Airbus sold International Lease six A-320 and A-330 jets for delivery in 1990 and 1993, a spokesman for the British, French, West German and Spanish consortium said.
Airlines increasingly lease their planes, instead of buying, for three basic reasons, said Mark E. Daugherty, an airline analyst with the Dean Witter Reynolds investment firm. First, he said, some airlines are too far in debt to borrow large sums for aircraft purchases. Second, recent tax changes have reduced the savings from owning aircraft.
And third, leasing planes allows airlines to adapt more quickly as the market changes and as new aircraft technologies come on the market, Daugherty said.
International Lease Finance also announced Monday the sale of three used jets for prices totaling $29 million. Chicago-based Midway Airlines purchased a used DC-9-30 while two British carriers, Britannia Airways and Dan Air, each bought a used Boeing 737-200 airliner. Contracts have been signed for both British deals, so the mishap last week in which a 19-year-old Boeing 737-200 belonging to Aloha Airlines lost part of its fuselage in midair will not affect the sale prices, Gonda said.
The Aloha incident and other recent safety problems experienced by Boeing-built airliners will have no effect on International Lease Finance’s decision on its 100-airliner purchase, Gonda said. “Those factors are not really significant. In many respects, the bad press Boeing has received . . . is just that, bad press.”
