International Lease Finance Corp. of Beverly Hills said Tuesday that it has agreed to buy 17 new jetliners for $1.05 billion, reflecting growing demand by commercial airlines for leased aircraft.
ILFC said it expects to pay about $730 million to Boeing Co. for five 767-300 carriers and seven smaller 757-200 jets. The firm has placed a separate $320-million order with Airbus Industrie, a European consortium based in Toulouse, France, for three A330 twin-engine widebodies and two smaller A320-200 jets.
The orders are ILFC’s largest since the firm agreed last May to buy 100 Boeing and 30 Airbus aircraft for $5.04 billion, its largest purchase ever.
ILFC executives said the new orders are attributable to increasing use of leased jets to supplement the aging fleets of major airlines as well as recent tax law changes that make leasing more attractive than in the past.
“These are highly fuel-efficient, noise-compliant, advanced-technology jetliners designed to meet the growing airline demand,” said ILFC President Steven F. Udvar-Hazy.
The company said the 12 Boeing planes are to be delivered from 1993 through 1995, and the Airbus deliveries will begin in 1992 and end in 1995.
Boeing’s production schedules have become an issue within the industry because some deliveries of its 747-400 jumbo jets--including one ordered by ILFC--have been delayed. But ILFC executives said they expect Boeing to meet its delivery schedule on its latest order.
Late delivery of aircraft was a major cause of a 15% decline in net income recorded by ILFC for 1988, according to the company’s executives. ILFC, the second largest of three companies dominating the aircraft leasing business, reported net income of $43.4 million on revenue of $213.2 million last year.
Mark Daugherty, an analyst at Dean Witter Reynolds in New York, said ILFC is willing to place large orders with Boeing because other aircraft manufacturers--McDonnell Douglas, for example--were late in delivering planes to the firm. ILFC had a fleet of about 60 planes last year and could have leased more planes if suppliers had met schedule deadlines, he said.
“They are trying to satisfy an insatiable appetite for airliners,” Daugherty said. “But a number of producers are having problems. It’s a sign of the times.”
Airline leasing demand has doubled since the federal tax reform act of 1986 eliminated the investment tax credit, removing an incentive for many airlines to buy their own jets, said Daniel Hersh, an analyst at Bateman Eichler, Hill Richards in Los Angeles. Worldwide, about 30% of all planes in airline fleets are leased, Hersh said.