64 Boeing 737 Max aircraft will be purchased by aircraft lessor DAE from China Aircraft Leasing

Dubai Aerospace Enterprise (DAE), a leading global aircraft lessor, has officially inked a definitive agreement to purchase 64 Boeing 737 Max jets from a subsidiary of China Aircraft Leasing Group Holdings. This strategic move aligns with the escalating growth in the worldwide airline industry. The order encompasses various models, including the 737-8, 737-9, and 737-10 variants, with the delivery of these narrow-body aircraft slated to commence in 2023 and extend through 2026, according to a statement released by DAE on Monday. However, the financial details of this substantial deal were not disclosed. This acquisition by DAE reflects the current landscape of the aviation sector, characterized by sustained high demand for air travel and challenges faced by aircraft manufacturers in meeting delivery timelines and addressing capacity constraints.

"This transaction will add certainty to our growth trajectory," Firoz Tarapore, chief executive of DAE, said.

"On a pro forma basis, this transaction will increase our fleet of owned, managed, committed and mandated-to-manage aircraft to approximately 550 aircraft, valued at approximately $20 billion."

With global air travel demand remaining robust, airlines are grappling with a limited supply of aircraft, prompting an increased reliance on aircraft lessors to augment their operational capacities. The International Air Transport Association reported a noteworthy recovery in global passenger traffic in June, reaching 94% of pre-COVID levels, particularly as the Northern Hemisphere's summer travel season gained momentum. Moreover, the urgency to address environmental concerns, exacerbated by record global temperatures, is compelling airlines to transition to more fuel-efficient aircraft. This shift in focus positions aircraft lessors as key players in meeting the escalating demand for environmentally friendly aviation solutions.

As a result of this latest deal, DAE anticipates elevating the proportion of new, fuel-efficient jets in its owned fleet to approximately 66%, a significant increase from the current 50%. Notably, around 20% of the acquired aircraft portfolio is already leased to airline customers who are existing clients of DAE. DAE plans to place the remaining assets directly in the market in the coming quarters. The completion of this transaction is expected in the third quarter of 2023, with assurances from the company that it will not impact its capital adequacy, liquidity, or funding ratios. This acquisition marks another milestone for DAE, which, including this transaction, has acquired or committed to acquiring about 500 Boeing aircraft since its establishment. The deal was facilitated with advisory support from international law firm Milbank LLP and consultancy KPMG Ireland. Despite the challenges posed by the aviation industry, DAE reported a marginal increase in profit for the first half of 2023, reaching $141.1 million in profit before exceptional items, compared to $140.1 million in the same period of 2022. This underscores the sustained demand from airlines for aircraft as global air travel experiences a resurgence.