Kuwaiti lessor ALAFCO will ask for shareholder approval in a special general meeting on December 27 to sell a significant part of its aircraft portfolio to Macquarie AirFinance Group. The transaction, which helps to improve the lessor’s financial position, has been discussed and approved by ALAFCO’s board of directors in November. ALAFCO’s balance sheet benefits from fleet sale to Macquarie.
The transaction proposal includes the sale of 53 aircraft in ALAFCO’s current proposal plus purchase agreements with Boeing for twenty MAX 8s. These aircraft were originally ordered during the 2017 Dubai Airshow (main picture) as the Kuwaiti lessor sought to grow its fleet and footprint. Back then, ALAFCO has forty MAX 8s on backlog but halved this again later.
The total transaction is valued at $2.2 billion (KWD 684 million) but will result in an accounting loss for ALAFCO of $61.4 million. With the proceeds, ALAFCO will reduce its net debt by $1.5 billion and improve its cash position by $710 million, while its capital commitments will be reduced by $916 million. Completion is expected within twelve months but requires regulatory approval.
ALAFCO’s current portfolio consists of 77 aircraft. Of this, forty percent are Airbus A320ceo’s, twenty percent A350-900s, fifteen percent A320neo’s, fifteen percent Boeing 777-300ERs, and ten percent Boeing 737NGs. The order book includes 48 Airbus A320neo family aircraft and twenty MAX 8s, of which most are due in 2024. ALAFCO’s customer base is 43 percent in the Asia Pacific, 21 percent in Europe, seventeen percent in the US, and fifteen percent in the Middle East.
In its nine-month results that were presented on August 16, ALAFCO reported a KWD -23.4 million loss compared to KWD -3.1 million in the same period last year. This includes the effects from a KWD 28 million impairment against wide-body aircraft that were placed with an airline in insolvency, as well as lower lease revenues due to the restructuring of leases and sale of aircraft. The lessor has been struggling with increasing losses during the Covid crisis.
Macquarie AirFinance current owned fleet includes 192 aircraft, including six Airbus A319ceo’s, 94 Airbus A320ceo and A320neo aircraft, seven A3212ceo’s, ten A330s, seventy Boeing 737NGs, two 777-s, and one Embraer E190. The lessor has commitments for 31 A220-300s plus ten options and twenty A320neo’s. The acquisition of the MAX 8s adds a new type to the fleet. Macquarie is fifty percent owned by Macquarie Group, 25 percent by PGGM Infrastructure Fund, and 25 percent by Australian Retirement Trust.
