NEW YORK (Reuters) - CIT Group Inc. (CIT.N: Quote, Profile, Research, Stock Buzz), the No. 3 commercial aircraft lessor, expects to lease more of an expanding jet fleet in foreign markets like India and China in coming years, its chief executive said on Wednesday.
CIT now leases 85 percent of its fleet of about 250 jets overseas and expects that portion to increase as U.S. airlines resolve their financial woes and Asian emerging markets see robust growth, CEO Jeffrey Peek said.
"We're just finding better credits as well as a better after-tax return on our investment outside of the U.S.," he said, speaking at the Reuters Banking Summit in New York. "We've probably got 15 percent of today's fleet leased to U.S. operators but every new plane we get, we're leasing outside of the U.S."
"You've got these big populations where literally hundreds of millions of people have never been on an airplane," he said, adding that an emerging middle class in those countries was feeding rapid airline growth.
CIT also favors leasing to foreign airlines because of certain tax advantages, Peek said, adding that the lessor also sees steady demand in Europe from tour operators who own their own fleets.
The strength of demand has boosted lease rates by 10 percent to 15 percent year-over-year and contributed to CIT's decision to order about $3 billion in aircraft from Airbus (EAD.PA: Quote, Profile, Research, Stock Buzz) and U.S. archrival Boeing Co. (BA.N: Quote, Profile, Research, Stock Buzz).
CIT's fleet will increase to about 300 over the next two years, bolstered by a $2.2 billion order last year for Airbus narrow and wide-body jets.
The lessor's current order book runs into 2008, Peek said. CIT will probably look at buying additional planes for 2009 and 2010 at the end of this year, he said.
Still, it is proceeding cautiously because of talk about a new generation of narrow-body planes with more fuel efficient engines and built of lighter composite materials like the twin-aisle 787 Dreamliner that Boeing is now designing.
"We don't want to be the last guys to buy the previous generation planes," Peek said. "That's not a smart place to be."
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