S'pore govt goes into plane-leasing business

S'pore govt goes into plane-leasing business

SINGAPORE (AFP): Two investment arms of the Singapore government have agreed to take strategic stakes in an aircraft leasing firm which expects more business amid a regional aviation slump, company officials said yesterday.

Temasek Holdings and the Government of Singapore Investment Corp. (GIC) agreed to buy a 14.5-percent stake each in Singapore Aircraft Leasing Enterprise (SALE) for $62.5 million apiece, SALE officials said.

Before the deal, SALE was a 50-50 joint venture between Singapore Airlines Ltd. and U.S.-based Boullioun Aviation Services Inc. They will each keep a 35.5 percent stake in SALE.

The capital injection by Temasek and GIC will raise the paid- up capital in SALE to $$375 million, allowing it to further expand into the aircraft leasing and operating business globally, the company said.

SIA and Boullioun have a commitment to inject S$125 million each into the leasing company, which now has eight aircraft and plans to have 40 by 2001.

SALE managing director John Willingham said the company has placed 12 firm orders for A320 aircraft from Airbus Industrie and six firm orders for B777 aircraft from the Boeing Co.

Of these 18 aircraft, eight have already been delivered to commercial airlines. There are talks with a North American carrier to place three other planes.

SALE chairman Matthew Samuel said airlines will do more leasing now that the world airline market is down, because leasing is more cost effective. This is partly due to the impact of the currency turmoil in Southeast Asia, which has slowed down airline traffic.

"The scope for growth is considerable and we can expect the market share of leased aircraft to grow still further in an expanding aviation industry," Willingham said.

He added that the number of leased aircraft in Asia increased significantly in the last five years from only 100 jets in 1991 to 300 by 1996.