Are such actions a tacit indicator of China's Boeing versus Airbus preferences? Little is done with international lending without the approval of the central government. In the past months it appears such Chinese financing deals have been exclusive to Airbus purchases. This is the largest of such announcements, as well as the most aggressive, given the financing for pre-delivery deposits, otherwise unheard of because of the high-risk nature implied. Very interesting dynamics here. Has China been promised something by EADS that is not known elsewhere? I smell favoritism. Or perhaps China may see weakness in Airbus and wants to keep a healthy duopoly until it really enters the aero manufacturing arena in the coming decade or so. (Or, maybe I am just a paranoid conspiracist!)
Netherlands-based AerCap is one of the world's largest aircraft lessors and is merging with listed rival Genesis Lease Ltd (GLS).
Tight credit markets have ranked alongside weak passenger and freight traffic in pushing airlines and other lessors to cancel or defer aircraft deliveries.
AerCap said Friday it had secured $358 million from China Development Bank to fund Airbus A330 deliveries, including $96 million in hard-to-find pre-delivery deposits.
Chinese banks are becoming increasingly active in aircraft finance, helping alongside the expansion of Middle East backers to fill part of the gap left by the exit from the sector of many traditional financiers.
Heinemann said the Chinese funding would replace some backing originally slated to come from European export credit agencies which, together with the U.S. Export-Import Bank, have become a key source for the industry during the recession.
His comments came as AerCap beat market expectations with a third-quarter profit of $35.5 million, or 42 cents a share. This compares with $51.3 million, or 60 cents per share, a year earlier. The core leasing business saw net spread, a key measure of lease rental income after interest expense, grow 23%.
Airlines have increasingly turned to renting aircraft as weak finances left them unable to purchase equipment, but Heinemann said the pressure from carriers to cut rates was "benign".
AerCap shares were recently down 3.2% at $8.62. The stock has almost tripled since the start of the year.
-By Doug Cameron, Dow Jones Newswires; 312-750-4135; doug.cameron@dowjones.com
(Joan E. Solsman contributed to this article)
(END) Dow Jones Newswires
November 06, 2009 11:01 ET (16:01 GMT)