Aircraft leasing deal clinched

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Last updated at: (Beijing Time) Thursday, October 09, 2003

Aircraft leasing deal clinched

The Shenzhen Financial Leasing Co Ltd has signed a contract with Xi'an Aircraft Industry (Group) Co Ltd to buy four Xinzhou-60 aircraft, company executives said.

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The Shenzhen Financial Leasing Co Ltd has signed a contract with Xi'an Aircraft Industry (Group) Co Ltd to buy four Xinzhou-60 aircraft, company executives said.

The four jets, which will be leased to two airlines in Southeast Asia, will be the first Chinese-made aircraft to be leased outside the country, and will pave the way to garnering a larger market share for Chinese aircraft makers in the highly competitive international marketplace. A Shenzhen Financial Leasing manager declined to name the lease holders.

"In international aircraft markets, leasing is the widely accepted way, and customers are reluctant to buy," said Wu Rongyao, director of the Aviation Business Department under Shenzhen Financial Leasing. "The contract signals a breakthrough in our marketing mode and draws Southeast Asia into our client base for future business development."

The four 60-seat civil-use regional jets, worth a total of 260 million yuan (US$31 million), will be delivered in November and December of 2004 and 2005 under an eight-year lease contract with the lease holders.

Aircraft leasing is still a budding business in China. Although as much as 80 per cent of the country's operating jets are leased, local leasing firms hold only a small fraction of the business. The market is dominated by global giants like General Electric and American International Group.

Local aircraft makers have been fighting an uphill battle to get a foothold in the international marketplace, where, analysts say, China-made aircraft - including the Xinzhou-60 and an upcoming bigger model of the ARJ21, which is also designed to fly regional routes - have yet to win significant market recognition.

Shenzhen Financial Leasing, the first Chinese leasing company to enter the aircraft industry, signed a framework agreement with the Xi'an aircraft manufacturer in 2000 to find lease holders for 60 of its Xinzhou-60 jets. So far, it has reached agreements of intent with foreign clients for 12 of the jets, including the four in yesterday's contract. It signed a lease contract with local Wuhan Airlines early in 2001 for another three jets.

"We've been working hard," said Wu. "We are pretty satisfied with the progress, since the Xinzhou-60 has been in the market for only three years."

"I believe the pace (of finding lease holders) will get faster and faster in the future," he added.

Also Wednesday, Shenzhen Financial Leasing signed a 3.35 billion yuan (US$403 million) lease contract with three companies in South China's Guangdong Province to provide funds and equipment for the province's "Yuelongmen" Campus Information Project, which is working to integrate teaching software and online learning resources of all middle and primary schools in the province to improve teaching efficiency.

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