Li’s Cheung Kong takes to the skies

Hong Kong-based Cheung Kong Holdings Ltd, the flagship company of Asia’s richest man Li Ka-shing, will enter the aircraft leasing business.

The company agreed to pay US$1.9 billion to buy 45 aircraft from a variety of sources for its own leasing operation. In addition, Cheung Kong will form a 60/40 leasing joint venture with MC Aviation Partners (the aircraft leasing subsidiary of Japan’s Mitsubishi Group), and will buy an additional 15 aircraft for $734 million to launch that operation. Full details are not available, but according to a Bloomberg report, the known aircraft purchases are as follows:

• Through its Accipiter Holdings subsidiary, Cheung Kong will buy 18 aircraft from GECAS for $718 million. These include eleven A32-200s, five 737-800s, and two 737-900ERs. The average age of the GECAS aircraft is 3.1 years.

• Accipiter will buy an additional three 737-800s from GE affiliates for $101 million

• Cheung Kong will buy ten aircraft from BOC Aviation Pte (the leasing arm of Bank of China), in two separate purchase agreements of $213 and $279 million, respectively.

• Cheung Kong will buy fourteen aircraft from Jackson Square Aviation LLC for $584 million

The aircraft (believed to all be in passenger configuration) in these purchase agreements are all currently leased to carriers for an average of six to nine years.

Regarding the joint venture with MC Aviation Partners, the deal reportedly will see MC transfer fifteen aircraft from its currently owned fleet as a seed portfolio for the JV

Earlier reports indicated that Cheung Kong was negotiating to buy aircraft from AWAS, or indeed to buy AWAS from its owner Terra Firma Capital Partners, but so far there has been no confirmation that a deal has been concluded.