In little more than a year of its existence, AviLease has become a major player in global aviation as one of the top lessors to the airline industry, thanks to the backing of Saudi Arabia’s Public Investment Fund (PIF).

PIF established AviLease in July 2022 as a “core element” of the Kingdom’s expanding aviation ecosystem. The Saudi sovereign wealth fund said that the company will “scale through purchase-and-lease-back transactions, secondary portfolio acquisitions, direct orders from aircraft manufacturers, and corporate acquisitions.”

Aircraft leasing companies facilitate a large volume of air travel, providing planes to airlines worldwide. These companies buy, lease, and rent airplanes to airline companies, governments, and VIPs. The global leasing industry has been growing rapidly in recent years with commercial aircraft leasing being one of the most rapidly developing segments.

Sure enough, it has become one of the world’s top 30 aviation lessors, having agreed to acquire Standard Chartered’s global aviation finance leasing business for about US$3.6 billion. AviLease will pay an initial consideration of US$700 million and is also funding repayment of US$2.9 billion of net intra-group financing from the StanChart group.

Standard Chartered Aviation Finance owns and manages more than 120 aircraft and offers services including jet fuel hedging, debt financing and remarketing of unneeded planes. The business was ranked as the 28th biggest lessor based on number of aircraft in 2022, according to Air Finance. In terms of the value of the whole fleet, the business is worth US$3.04 billion.

According to Simple Flying, “the combined platform will own and manage a total of 167 fuel-efficient aircraft. Of the 167, 145 of the aircraft have an owned value at an estimated US$6 billion and 22 of the managed aircraft are valued at around US$800 million, all of which are leased out to 46 airlines worldwide.”

Based on Air Finance’s ranking for 2022, AviLease’s fleet will be the 23rd biggest in the world – quite an achievement for a lessor that is little more than a year old.

Avi Lease’s growth comes alongside PIF’s investment in the development of local airlines. In March, PIF indicated it was launching Riyadh Airlines with aircraft order valued at US$35 billion, connecting the Saudi capital to over 100 destinations globally by 2030. PIF hopes the new airline will increase international transit passengers from under four million in 2021 to 30 million by 2030. The fund claims that the airline is expected to add US$20 billion to non-oil GDP growth, and create more than 200,000 direct and indirect jobs.

Riyadh Air is the Kingdom’s second national carrier after Jeddah-based Saudia, and is being set up to rival the Gulf region’s other sovereign wealth fund-owned airlines. It forms part of a planned US$100 billion in aviation investment under Saudi Arabia’s Vision 2030 program, the brainchild of the Kingdom's de facto ruler Crown Prince Mohammed bin Salman (MBS).

PIF has also mooted plans for a third airline, which would serve the planned US$500 billion new metropolis, NEOM, in the northwestern Tabuk province. The third flag carrier will operate exclusive routes to cities in Europe and Asia would make NEOM a prime destination for international travellers.  The airline plans to launch in late 2024, initially operating aircraft that were acquired secondhand; starting in 2026, the airline will introduce “new innovative aircraft, whether it be electric, hydrogen-powered, or supersonic”

Related funds PIF
Related tags Aviation