Jetalliance offers new kind of aircraft lease

By Thierry Dubois

May 23, 2007
Aviation Financing

Austrian-based operator Jetalliance announced here on Tuesday that it is now offering what it claims to be a new kind of business aircraft financing called asset-based leasing. Under the scheme, a firm or individual agrees to make a down payment for part of an aircraft–say, 30 percent. Jetalliance then buys the aircraft from the manufacturer. It will then own the remaining 70 percent.

Both owners’ equities are in fact held in a single-purpose company (SPC). Technically, the latter is the actual aircraft’s owner. Jetalliance’s customer will have to pay a monthly lease rate. Hopefully, chartering out the aircraft will reduce or offset the lease rate, Christian Lang, JA Asset Based Leasing manager, explained to EBACE Convention News. Charter income goes into the SPC.

The Austrian company is expecting to receive short-notice requests, when a customer is about to take delivery of an aircraft it has ordered. Lang insisted the agreement can be made very fast–in two or three weeks. As Jetalliance is asking no guarantee, the process is significantly simplified. In addition, the customer is not requested to open his accounting books, as most aircraft financing schemes require.

Bank Merrill Lynch has provided JA Asset Based Leasing with a secured investment of $275 million. According to Jetalliance, Merrill Lynch’s total investment can be brought to an optional $400 million.

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