PIF-backed plane lessor AviLease aims for 300 jets as it vies for top-10 spot

Company has already announced lease agreements with Flynas and Saudia, and is in discussions with global airlines for more deals, its chief executive says

AviLease signed its first leasing agreement in July with Saudi budget airline Flynas. Photo: AviLease

AviLease, a plane lessor and financier backed by Saudi Arabia's sovereign wealth fund, expects to expand its fleet to about 300 by end of the decade as it aims to become one of the world's top-10 leasing companies.

The wholly owned subsidiary of the Public Investment Fund is engaged in leasing and financing talks with airlines and potential clients, chief executive Edward O'Byrne told The National on the sidelines of the Arab Aviation Summit in Ras Al Khaimah.

It expects to announce a few transactions before the end of this year.

“We are planning to be [in the] top 10 by the end of the decade, with 250 to 300 aircraft,” Mr O'Byrne said.

“There’s no hard number, there's no specific volume commitment", as AviLease wants to attain a scale that will allow it to lower its funding cost, he said.

To build its fleet, AviLease is looking at “tried and tested” narrow-body and wide-body aircraft “just to reflect the global fleet”, Mr O'Byrne said.

The company has 32 planes on order, of which it has already received four, with one more expected soon.

The lessor signed its first deal with Riyadh-based discount airline Flynas last year for the purchase of 12 new Airbus A320neo jets.

Under the agreement, AviLease will buy the aircraft, which will be delivered in 2022 and 2023, and lease them back to Flynas, it said at the time.

In November, the company signed a similar agreement with national airline Saudia to deliver 20 Airbus A320neo aircraft that will be operated on long-term leases by the group’s budget airline flyadeal.

Saudi Arabia aims to attract more tourists and develop the aviation sector, increasing its contribution to non-oil gross domestic product, as part of its Vision 2030 economic diversification agenda.

The Saudi Aviation Strategy calls for measures to triple annual passenger traffic to 330 million by 2030 and boost the number of destinations to 250, from 99 at present.

This strategy is backed by $100 billion in government and private sector investment.

Earlier this week, airlines in Saudi Arabia said they would buy up to 78 Boeing 787 Dreamliner jets, with an option to purchase another 43 in a deal worth $37 billion.

The kingdom's new airline, Riyadh Air, which was launched by the PIF, will purchase 39 Boeing 787-9s, with an option to buy an additional 33.

Saudia will buy 39 wide-body 787-9 and 787-10 Dreamliner jets, with the option to purchase 10 additional aircraft.

It is the fifth-largest commercial order by value in Boeing’s history. The first deliveries are scheduled for early 2025.

AviLease, which was founded in June 2022 and has its headquarters in Riyadh, is part of the PIF’s efforts to further boost the kingdom’s aviation sector.

The company, which focuses on leasing, trading and asset management services, intends to source deals in both domestic and international markets, as it is “not limited by geographies”.

“In terms of carriers, we're going to be global. You should expect us to have international customers by the end of the year,” Mr O'Byrne said.

“We are growing fast. We have momentum.”

AviLease is not constrained by the availability of funds for investment and is “well positioned from a capital structure standpoint”, he said.

The company is also looking to invest capital through secondary market transactions, acquiring aircraft portfolios and through mergers and acquisitions, as “another avenue of growth”, Mr O'Byrne said.

Although AviLease has the mandate to support the growth of aviation ecosystem in the Arab world’s biggest economy, its aspirations to develop a global clientele reflect the need to diversify its portfolio and cash flows, and eventually attain investment grade rating.

“If you are concentrated in one country, it is difficult to get the IG rating,” Mr O'Byrne said.

The company, which started operations nine months ago, is already in talks with investment banks to help it put in place processes that are required to attain the credit rating, he said.