BAE Systems Regional Aircraft reports strong 2008 market activity
In 2008 BAE Systems Regional Aircraft made 75 aircraft placements from its aircraft portfolio and took the number of aircraft on its power-by-the-hour-type support programmes to just less than 180.
Though inhibited on full disclosure of figures by the pre-annual result period for its parent company, BAE Systems Regional Aircraft Asset Management’s VP sales and marketing, Steve Doughty, told those gathered for the division’s traditional January press briefing that last year could be considered success for Regional Aircraft.
Acknowledging a difficult time for everybody in the market place, Doughty commented, “Nobody knows, even in good times, exactly what’s going to happen in the marketplace. So they have even less chance of knowing in bad times. The difference is that the outcome of a wrong decision in bad times is likely to be more severe.
“For many, ‘do nothing’ is an option and at the moment appears to be a good solution,” he added. “For those who do need to make a decision, lower capital cost assets are attractive as a reduced risk fleet solution. That’s making our aircraft increasingly attractive in some markets. Also, many of our markets were not using credit in the first place, so they have not really been hit by the credit crunch.”
In passenger markets, while the Avro RJ remains popular and few of Regional Aircraft’s portfolio are available, aircraft will come onto the market soon following decisions by BA CityFlyer and Lufthansa to re-equip. Doughty confirmed that he and his team are preparing for a remarketing challenge over next two to three years.
The older BAe 146 found nine new operators in 2008, with Doughty noting that the market has seen a shift from leasing to selling driven by aircraft values. “We expect the portfolio to shrink over the next few years,” he admitted, “helped by aircraft moving into alternative markets.”
The ATP also found new passenger service use in 2008 deals. NextJet of Sweden subleased three aircraft from West Air Sweden, while Air Aceh of Indonesia announced plans to acquire up to four aircraft for operation of services in Northern Sumatra.
In the Jetstream market, the company only has 31 aircraft left in its portfolio (seven J32s, 24 J41s) Doughty noted, and availability of those is expected to remain limited in the future. The operator base grew by five in 2008 and the year ended with a zero idle fleet.
Of aircraft coming off lease this year – a mix of seven jets and turboprops – Doughty says it is too early to say if they are likely to have their leases extended or be sold.
In the freighter business, almost 80% of the global fleet of ATPs has been converted for freight use. Regional Aircraft’s large freight door conversion contract with Romaero is complete and the last aircraft delivered to Atlantic Airlines, although the facility remains available for bespoke conversion orders.
Added to the operator list in 2008 was Airgo Airlines which acquired a portfolio aircraft on sub-lease from West Air Sweden to offer ad-hoc services from an Athens base into the Balkans and southeast Mediterranean.
The BAe 146QT programme suffered a setback when the planned launch customer pulled out shortly before the contract was due to be signed. The first -200QT was scheduled for completion and delivery in the third quarter of 2008. “We’re confident that we’ll place the aircraft though,” declared Doughty. “The market will come back.” One other aircraft has been converted to QT format.
Regional Aircraft Asset Management’s business development team has recently been expanded with a seven-fold increase in personnel specifically targeting third-party commercial aircraft remarketing and lease advisory business. The team is now led by Hamish Davidson as EVP business development with Paul Tattersall as SVP and Stewart Cordner as VP. Neil Berry is now VP lease management services with both Tammy Lumley and Jonathan Pierpoint each holding the title of director aircraft lease and advisory services. Finally, Peggy Hanley is the new manager, business operations.
“We’re putting our experience into the marketplace,” explained Paul Tattersall. “There are far more people looking for remarketing skills at present.”
“The creation of this team is a significant investment and shows a serious commitment to this business,” Doughty declared. The team is currently remarketing six MD-83s, one Jetstream 41 and one BAe 146QT on behalf of various owners.
In the support and engineering business 17 new aircraft were added to the “Spares by the Hour” programme, while contracts were extended covering a further 50 aircraft.
Bernie Baldwin, editor, Low-Fare & Regional Airlines/LARAnews.net