BEIJING, Aug 15 (Reuters) - ICBC Financial Leasing Co, China’s biggest domestic aircraft lessor, aims to deliver more than 300 planes to customers by the end of 2016, nearly double current levels, a senior executive said.
ICBC’s drive into a market still dominated by global players comes as Chinese leasing firms, backed by state lenders, play an increasingly important role in the growing domestic aviation business. Nearly 6,000 new commercial jets, worth $780 billion, are expected to be delivered over the next 20 years, according to aircraft maker Boeing Co.
“Local companies have been expanding quickly and the growth potential is huge,” Mark Jiang, managing director of aviation finance at ICBC Financial , told Reuters via email. ICBC Financial is backed by ICBC Industrial and Commercial Bank of China Ltd, while Bank of China Ltd and other state lenders support other lessors.
ICBC, which signed a $1.1 billion deal with Embraer SA for 20 E190-E2 jets during Chinese president Xi Jinping’s visit to Brazil in July, owns and manages 384 planes currently, up from 60 three years ago, according to Jiang.
Even though International Lease Finance Corp, part of AerCap Holdings NV, and GECAS, a unit of General Electric , still dominate the market, local lessors led by ICBC and CDB Leasing, backed by China Development Bank, have managed to win over a big chunk of new business in recent years.
Collectively, Chinese lessors now handle 80 percent of all new domestic leasing business, up from next to zero five years ago, said Jiang. ICBC now has 17 domestic clients and 34 overseas clients.
By 2018, they are expected to corner 55 percent of the Chinese market overall, up from 38 percent last year, according to industry consultancy Ascend.
“Chinese firms have shown the ability to go into the market in a very significant way,” said Illya Ivashkov, senior director at Fitch Ratings. “Some of them have placed sizeable orders.”
Growth prospects in China’s expanding leasing market also helped China Aircraft Leasing Group Holdings Ltd (CALG) raise nearly $100 million at an initial public offering in Hong Kong last month.
More IPOs are possible, industry observers say, but a more common approach for the leasing arms of big Chinese banks may be to set up subsidiaries in the recognised international aircraft financing hubs of Singapore and Dublin to raise funds. (Reporting by Fang Yan and Matthew Miller; Editing by Kenneth Maxwell)