Leasing Firm to Order 90 New Planes : Aerospace: Biggest such deal of 1992 comes even as United Airlines moves to cut back on its airplane acquisitions.
International Lease Finance, a giant aircraft leasing firm, is expected to announce today a $4-billion deal for 90 new aircraft, split almost entirely between Boeing Co. and Airbus Industrie, industry sources said Monday.
The International Lease deal, which would be the largest aircraft order in 1992, came as a sharp counterpoint to a retrenchment disclosed Monday by United Airlines. The nation’s second-largest airline said it had begun talks with Boeing to significantly reduce its orders for 175 aircraft and options for an additional 258 planes.
Los Angeles-based International Lease is anticipating continued growth in its leasing business despite the overall softness in the airline industry. The company recently said it already has about 200 aircraft on order, 60% of which are already leased to airlines. It leases an existing fleet of 185 aircraft around the world.
In contrast, United said its decision to reduce spending on new aircraft reflected the persistent weakness in the industry. The airline industry’s Big Three--American, United and Delta--all have deferred deliveries and canceled options for planes.
“We remain very concerned with the ongoing economic turmoil in our industry,†Stephen Wolf, chairman of United and its parent corporation, UAL Corp., said in a statement.
“While United already has implemented significant cost-reduction programs, our losses have nevertheless continued at an alarming rate,†Wolf said. “We must, therefore, explore additional avenues to reduce our costs and thus improve our financial performance.â€
Wolf said United “will take whatever steps are appropriate to ensure the long-term viability of the company.†Last month, in another cost-cutting move, United announced that it was selling its Air Wisconsin subsidiary.
Dean Thornton, president of Boeing Commercial Airplane Group, said in a statement: “We share United’s concern about the economic condition of the commercial aviation business. We will work with United to arrive at a mutually acceptable means of addressing its concerns.â€
The aircraft leasing business has not been immune to the industry’s problems. International Lease’s rival, Ireland-based GPA, has been struggling to avert insolvency this year. But International Lease remains financially solid, reporting third-quarter, pretax earnings of $59.7 million, up 35%. Revenue rose 28% to $186 million.
The Los Angeles company’s $4-billion deal would be by far the largest aircraft order of 1992, although it would pale in size to the rush of speculative orders placed during the late 1980s by airlines and leasing firms.
McDonnell Douglas was nearly shut out of the latest International Lease order; it will get only one order for an MD-11 jetliner, sources said.
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