The Japanese connections of Engine Lease Finance Corporation have helped the Dublin-based lessor procure the ammunition to expand and renew its spare engine portfolio.
Owned by Mitsubishi HC Capital, Engine Lease Finance Corporation (ELFC) has just agreed to a $650 million loan with the Japan Bank for International Cooperation (JBIC) and MUFG Bank.
JBIC said the loan would enhance the international competitiveness of the Japanese engine leasing sector and support ELFC in “expanding the number of engines it owns and manages by replacing existing engines with new types of engines that have better fuel efficiency.”
Since 2022, ELFC has invested about $1.5 billion in engines, with almost all its acquisitions being new-technology variants. At the end of 2023, ELFC’s portfolio comprised about 360 engines, of which about 90% were for narrowbody aircraft.
Speaking to Aviation Week Network’s Engine Yearbook 2024, ELFC President Richard Hough notes that while current-generation CFM International CFM56 and IAE V2500 models would sustain a significant part of the lessor’s business for the rest of this decade, its “future portfolio growth plans are mostly focused on the latest technology engines for the [Airbus] A320neo, [Boeing] 737 MAX and the [Airbus] A220.”
He also highlights the growing importance of access to capital in a higher interest-rate environment. “Even though market lease rates for most engine types are on the rise, the additional cost of debt and equity will hinder the potential returns in the current market that could have been achieved a few years ago,” he says. “The effect will lead to even higher engine rentals with those well-capitalized lessors in a better position to be most competitive.”
For the full interview with ELFC’s president, pick up Aviation Week’s Engine Yearbook 2024.
