Leasing Group IFC Tempts Gulf Carriers With Jet Quintet

Dubai Air Show » 2013
Airlines in the Gulf have five jets to choose from in the Ilyushin Finance Co. (IFC) stable. Among them is the An-148/158, as seen here in Dubai.
November 17, 2013, 5:45 AM

Fast-growing Russian leasing group Ilyushin Finance Co. (ILC) is targeting the Middle East market with a portfolio of five airliners that could exploit the increasingly blurred lines between traditional regional air transport fleets and new-generation narrowbodies. In increments of 15 to 25 passenger seats, IFC offers the following five types spanning capacities of between 68 and 212 seats: Antonov’s An-148/158, the Sukhoi Superjet SJ-100, the in-development Bombardier CSeries and Irkut MC-21-300, as well as the Tupolev Tu-204SM.

According to Stewart Cordner, IFC’s head of international sales, the mix of what the group views as complimentary aircraft will strengthen the hand of Middle Eastern carriers as they seek to develop relatively short, thin routes in an increasingly competitive marketplace. He also argued that the fact that many countries in the region have extensive experience operating Russian-made military and freighter aircraft gives brands such as Sukhoi, Antonov and Tupolev greater cachet.

“The whole of Asia is a very interesting place for us,” Cordner told AIN ahead of this week’s airshow. “We would not be in Dubai unless we thought there is a market for us there. We would not spend money if we would not feel there is a chance for return.” His team of 10 people is now refining a specific marketing plan for IFC in the Middle East.

At Moscow’s MAKS air show in August, IFC delivered its 50th leased aircraft (an An-158) to Cuban flagcarrier Cubana de Aviacion. It also signed orders and commitments for almost another 100 aircraft.

Cordner, who is British, brings an interesting perspective and past experience to the task of expanding IFC’s marketing horizons. Formerly with the UK’s BAE Systems group, he has experience trying to advance the case for operators in this part of the world to lease examples of its BAe 146 and Avro RJ four-engined regional jets.

Cut from similar cloth, in terms of its ability to operate from short- and unprepared airfields, the high-wing An-148/158 twinjets are, according to Cordner, everything the British quadjets sought to offer and more. “When people with 146 experience look at the An-148/158 I see them half-smile because they think it was actually the airplane that BAE Systems should of developed,” he claimed. He believes the Antonov aircraft are well placed to be chosen as replacements for the aging, out-of-production 146s and Avro RJs for operators eager to improve their fleets with greater speed, range and fuel efficiency. “And that’s exactly what the An-148/158 delivers,” he said. “A brand new Antonov makes sense since it does everything that the 146 did but three times better.”

With range boosted to 3,804 nm with additional fuel tanks, the An-148 can also provide a viable alternative to bigger jets currently employed on some governmental duties. One target fleet replacement customer is Abu Dhabi’s head of state flight department, which is currently a 146/Avro RJ customer.

“I am sure that the Superjet can also do well [in the Middle East],” Cordner told AIN, pointing out that Sukhoi’s fighter jets are held in high regard by several local air forces. Perhaps more significantly, attractive export credit terms are available to customers through government-backed Russian banks, reducing both the purchase price and operating costs of the SJ-100.

According to IFC, the SJ-100 is a good option for airlines looking to nurture relatively thin routes in the Middle East. The leasing group maintains that once a route has been proven and is growing, it will be able to boost a carrier’s capacity and profit potential by smoothly replacing the Sukhois with larger jets from its portfolio, such as the CSeries or the MC-21. “For a leasing company like ours it is important to have a good mix of aircraft so that we can start with an operator by giving him a smaller jet initially and, say, after 10 years still staying together.”

Cordner said he sees “significant prospects” for Bombardier’s CSeries in the Middle East, with clients in the Arabian Gulf accounting for several of the Canadian airframer’s backlog of orders. “We want to capitalize on this,” he said. “There is a big gap between regional jets and the smallest Airbus and Boeing aircraft, and that is where the CSeries plugs in. What we are doing right now is convincing people to look at the CSeries.”

IFC (Chalet C8) holds firm order for 32 CS300s plus options for 10 more, with deliveries due to in start in late 2015. “Early [delivery] slots do play a role, and that is why we ordered the airplane early,” explained Cordner. “We spent a lot of time deliberating over this and we did not want to be the first [CSeries customer], but we did not want to be far away among other lessors. And we found sweets spots in our analysis. Before 2020 we are going to be one of few leasing companies able to offer airlines CSeries aircraft on lease terms.”

Carriers getting in line now to order a CSeries directly from Bombardier are looking at delivery slots in 2018 and 2019. Where IFC feels it has an edge is that he can get them aircraft almost four years sooner, saving, Cordner claimed, between $2 million and $5 million per aircraft per year, based on projected operating cost savings compared with existing fleets. “Instead of waiting, customers can have greater profits more quickly,” he said. “This is the kind of discussion we are having with airlines now.”

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