CORRECTED-UPDATE 1-Mitsubishi UFJ Lease to buy US aircraft lease firm for $1.3 bln

Thu Oct 4, 2012 3:22am EDT

(Removes unnecessary word from the lead paragraph)

* To finance acquisition through cash, loans

* Mitsubishi UFJ Lease shares climb 3.0 percent

* Japan firms are expanding aircraft lease operations

TOKYO, Oct 4 (Reuters) - Mitsubishi UFJ Lease & Finance Co agreed to buy U.S. aircraft leasing firm Jackson Square Aviation from Oaktree Capital Group LLC for about $1.3 billion, signaling rising interest from Japanese companies to tap the growth potential of aviation finance industry.

Japan's No. 3 lender Sumitomo Mitsui Financial Group acquired Royal Bank of Scotland's aircraft leasing business for $7.3 billion in June, becoming a major player in the industry that is expected to enjoy growth amid the growth of low-cost carriers and rising air travel in emerging markets.

Mitsubishi UFJ Lease, 20 percent owned by Mitsubishi Corp , will acquire JSA International Holdings for about 100 billion yen ($1.27 billion), the Japanese company said in a statement. It will use cash on hand and new loans to finance the acquisition, scheduled to take place in December, it said.

San Francisco-based Jackson Square Aviation, led by Pegasus Aviation founder Rich Wiley, has a fleet of about 70 aircraft. Earlier this year, Mitsubishi UFJ Lease set up an aircraft lease operation in Dublin, with a fleet of about a dozen planes.

"Not only in aviation leasing but in other areas as well, we may make further acquisitions when there are companies with good assets," a Mitsubishi UFJ Lease spokesman said.

Faced with weak business demand at home, an increasing number of Japanese financial companies are making a push into the aircraft leasing industry, taking advantage of the retreat of European rivals.

Orix Corp, which has one of Japan's largest aircraft leasing operations, has said it plans to increase the fleet owned or managed by the firm to 200-250 within a couple of years from current 150.

Mitsubishi UFJ Lease's shares climbed 3.0 percent on Thursday. Japan's benchmark Nikkei index gained 0.9 percent.

($1 = 78.5300 Japanese yen) (Reporting by Mayumi Negishi and Taiga Uranaka; Editing by Edwina Gibbs and Muralikumar Anantharaman)

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