Leasing Firm Orders Jets Worth Up to $5.2 Billion
International Lease Finance, a major aircraft-leasing firm based in Beverly Hills, said Tuesday that it has ordered 42 airliners worth $1.9 billion from Airbus Industrie, McDonnell Douglas and Boeing and placed options for 67 additional planes worth $3.3 billion.
The company said it ordered 15 jetliners each from Boeing and McDonnell Douglas, and 12 from Airbus, the European consortium.
In addition to the new orders and options, International Lease said it exercised $1.055 billion worth of options for 24 Boeing jetliners, including 19 narrow-body 737s. International Lease acquired the options in May, 1988.
Tuesday’s order is unusual for International Lease because it consists mainly of options. Normally, firm orders dominate the company’s aircraft purchase plans. Buyers ordinarily pay a manufacturer less when they take an option than when they place a firm order; if they decide later to go ahead with the purchase, the option is converted to an order.
Steven F. Udvar-Hazy, president of International Lease, said the emphasis on options reflects recent uncertainty in the airline industry caused by higher fuel prices, deregulation in Europe and talk in Congress of a return to regulation in this country. Most of the company’s customers are airlines that prefer to lease rather than own their planes.
“We feel this order leaves us well-hedged and gives us maneuvering room to determine demand,” Udvar-Hazy said.
International Lease split its order for narrow-body aircraft between Boeing and McDonnell Douglas. St. Louis-based McDonnell Douglas, which builds its commercial airliners at its Douglas Aircraft subsidiary in Long Beach, was shut out in 1988 when the leasing company ordered $6.6 billion worth of planes from Boeing and Airbus.
However, Seattle-based Boeing stands to get the lion’s share of Tuesday’s narrow-body order if all the options are exercised.
Udvar-Hazy said the company decided to order the 15 McDonnell Douglas twin-engine MD-90s and take options on 15 more because the company already has a large number of Douglas MD-80s in its fleet, and “we felt we needed something to succeed the MD-80s going into the 1990s.”
The MD-90 orders and options will give a boost for the Douglas jet, whose only other customers so far are Delta Air Lines and Alaska Airlines. The plane is early in its development stage, and the first one would be delivered to International Lease in 1995.
The firm orders for the McDonnell Douglas planes were worth $565 million, and the options totaled $560 million.
International Lease ordered eight Boeing 737s and took options on 24 others because, Udvar-Hazy said, the aircraft is popular with many customers. International Lease took options on a total of 48 Boeing aircraft, including 747s, 767s and 757s. The company said the firm orders were worth $795 million, and the new options were worth $2.59 billion. International Lease said delivery would begin in 1995.
From Airbus Industrie, International Lease ordered 12 A321-100s worth $510 million and placed options for four more, worth $170 million, for delivery in 1995.
