Another interesting consolidation is happening in the leasing world: SMBC Aviation Capital is acquiring Goshawk Aviation. Japanese-owned SMBC is paying $6.7 billion for its former competitor from Hong Kong and will become the second-largest lessor in the world, behind the AerCap/GECAS combination that merged last year. SMBC acquires Goshawk to become second-largest lessor.
The acquisition was announced on May 16 after Goshawk shareholders NWS Holdings Limited and Chow Tai Fook Enterprises approved the offer from SMBC.
Dublin-based SMBC Aviation Capital was established in 2001 but acquired in 2012 by two Japanese companies, Sumitomo Mitsui Financial Group (SMFG) and Sumitomo Corporation. It has an owned, managed, and committed fleet of 720 aircraft. According to its website, SMBC has 113 Airbus A320ceo, 107 A320neo aircraft, 27 A321ceo, forty A321neo (including the one for Scoot on the main picture delivered in March), twelve A350-900s, two A350-100s, 139 Boeing 737-800s, 44 MAX, fourteen 787-8s, sixteen -9s, plus seventeen other aircraft. Unfilled new aircraft orders include 112 A320neo, 39 A321neo, and seventy 787s.
Goshawk Aviation, with its headquarters also in Dublin, was formed in 2013. It has a current and future portfolio of 216 aircraft, although its website says 222. It has 50 Airbus A320ceo, 39 A320neo, 24 A321ceo, six A321neo, one A330-200, three A330-300s, one A330-900, two A350-900s, two A350-1000s, one 737-700, 56 Boeing 737-800s, four 737-900ERs, 22 MAX 8s, two MAX 9s, three 777-200LRFs, three 787-8s, and three 787-9s. Its backlog includes twelve A320neo’s, eight A321neo’s, and twenty MAX -8s and -10s.
Goshawk delivered this former Philippine Airlines Airbus A350-900 to Lufthansa. (Goshawk)
Only last week, Goshawk delivered a former Philippine Airlines A350-900 to Lufthansa. It also sold its sole Embraer E190 to ACIA Aero Leasing. Excluded from the transaction are forty aircraft, most of which were leased by Goshawk to airlines in Russia. SMBC is also exposed to Russia and said in March it holds $177 million in securities.
“The combined business will have a portfolio of 709 owned and managed aircraft and an additional $13 billion of orders from Boeing and Airbus comprising exclusively of 261 new technology narrowbody aircraft”, says SMBC in a media statement. The combination will have total assets of $37 billion, including orders for Airbus A320neo family and Boeing MAX aircraft. 82 Percent of the net book value is comprised of narrowbody aircraft.
The statement says: “The transaction brings together two strategically aligned and complementary businesses, creating the largest Japanese-owned aircraft lessor and the second largest global player by number of aircraft. The enlarged business will benefit from a best-in-class portfolio focused on new technology narrowbody aircraft and an industry-leading funding advantage uniquely positioned to capitalize on opportunities presented by the sector recovery.”
Acquisition of Goshawk accelerates growth SMBC
SMBC has been keen to accelerate its growth based on a young fleet. The acquisition also means further diversification of its portfolio as it adds 24 airlines that previously weren’t customers. “This is the right transaction for SMBC Aviation Capital, allowing us to better serve our customers in a fast-evolving sector whilst also accelerating our growth and delivering significant value for our shareholders”, said CEO Peter Barrett. “Goshawk is a high-quality business with assets and people that complement our own. The combined business will continue to have a disciplined focus on young, liquid, most in demand narrowbody aircraft with one of the most environmentally friendly portfolios of any major leasing company together with 261 new generation, fuel-efficient aircraft on order.”
Goshawk CEO Ruth Kelly said in a statement: “I am so proud of the commitment and extraordinary achievements of the Goshawk team who created a world-class leasing company, delivering innovative solutions to our customers and value to our stakeholders since 2013. I am confident that this marks the beginning of an exciting chapter as market trends point to growth in aircraft leasing with great opportunities for people involved in aviation.”
SMBC will finance the transaction through a combination of debt and equity. “Debt financing for the transaction will be sourced from the shareholders as well as the bank and capital markets. Equity for the transaction will be provided by SMBC Aviation Capital’s shareholders, Sumitomo Mitsui Financial Group and Sumitomo Corporation.” The transaction is subject to regulatory approval and is expected to close in the second half of 2022.
