ILFC Sees A320neo as a Near Perfect Fit

 - July 1, 2013, 10:30 AM
Airbus COO for customers John Leahy (left) and ILFC chief executive Henri Courpron pose with a model of an A320neo after the leasing company exercised options on another 50 of the narrowbodies during last month’s Paris Air Show. (Photo: Vladimir Karnozov)

ILFC, a wholly owned subsidiary of American International Group and one of the world’s largest aircraft lessors, preaches diversification in terms of aircraft and engine purchases, geographical distribution of its fleet and in the forms of leasing and financial programs it employs. Its Airbus A320 orders, which number 769 following additions at last month’s Paris Air Show, perhaps best reflect the company’s philosophy, notwithstanding the calculated risk it took when it signed as the A320neo’s launch customer.

As the launch customer, ILFC holds early slots and expects its lessees to take some of the first airplanes when the A320neo enters service in October 2015. If the early airplanes fail to meet performance and reliability expectations, ILFC’s customers will feel the consequences. “Sometimes it happens,” company CEO Henri Courpron told AIN in Paris, “but please keep in mind that the A320neo is not an all-new airplane. Some 5,600 airplanes of this family have been flying all over the world. So we are confident that the entry into service for the A320neo will be smooth.”

Even so, ILFC mitigated the risk by taking airplanes powered by each available engine type. “The good thing about the A320neo is that it has a choice of engines,” said Courpron. “When we placed our first order, we announced that sixty of these airplanes would be with [Pratt & Whitney] GTFs and forty with [CFM] Leap-Xs.”

Even the choice of assembly sites plays into ILFC’s risk mitigation strategy. Plans call for the two Airbus assembly lines in Europe and one under construction in Alabama to fill its A320 orders.

To Courpron, the geographic diversity of the A320 customer base also bodes well for the A320neo.

“We know that our repositions will be attractive to airlines all over the world,” said Courpron. “We have some 200 customers around the world, so the geographic location is something we control. No doubt, we will place the newly acquired airplanes in Europe, China–where we have been the largest aircraft lessor–and Russia, where we have also been successful.”

Of course, doing business in emerging air transport markets carries its own risk, but one, according to Courpron, ILFC can afford to take.

“We understand that it is difficult for airlines to stay afloat and some of the airlines will fail,” he acknowledged. “That’s part of life in commercial aviation. We are willing to take that risk, but this risk needs to be mitigated by a responsive system behind it.”