BAE Systems Regional Aircraft is targeting the remarketing business as it looks to shield itself from hard times in the leasing market and make the most of recessionary opportunities.
Towards its goal, the company has created a new business development team within its Asset Management business. Headed by lease advisory specialist Hamish Davidson, the team is divided between offices at Hatfield and Farnborough in the UK and Herndon, Virginia in the USA.
Lease advisory business has been assigned to Tamara Lumley at Herndon and Jonathan Pierpoint at Hatfield, while remarketing of non-BAE aircraft is now the responsibility of Paul Tattersall at Hatfield and Stewart Cordner, who reports to Hatfield from Berlin. Lease management services have become the domain of Neil Berry at Farnborough.
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Vice-president of sales and marketing Steve Doughty says the business development team has been grown to better leverage "deal-making experience", with the current market presenting "better opportunities" for aircraft remarketing than the "overheated" one of recent years.
To avoid competition with the regional aircraft leasing business, the remarketing effort is focused on non-BAE types, including what Doughty terms "the heavy iron...all the way up to Boeing 747s". The team has, for example, been selected to remarket six Boeing MD-83s on behalf of investment vehicle Jets MD Lease - aircraft previously operated by Turkey's Onur Air and Colombia's Avianca.
A SIDELINE EXPANDS
The redoubling of remarketing efforts is part of an ongoing transformation of BAE Systems Regional Aircraft, which in April 2002 relaunched itself as a pure service business following cessation of its aircraft manufacturing operations. Remarketing was initially "a sideline", says Doughty. However, it has to come to the fore as ageing of the BAE types threatens leasing demand.
"Where aircraft come out of first-line operators - British Airways, Lufthansa - they inevitably move to the developing parts of the world, and those markets have traditionally bought aircraft for cash," says Doughty. "An operating lease is quite a sophisticated product. When you get down to relatively low-value assets, it's just not worth doing. If you're talking about a [100-seat] BAe 146 for maybe $1.8 million, in relative terms that's not a lot of money for that aeroplane. It's similarly true if you're looking to buy MD-83s for three or four million dollars."
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© BAE Systems |
As of January 2009, BAE Systems Regional Aircraft's lease portfolio comprised 82 Avro RJs, 50 BAe 146s, 28 ATPs and 31 Jetstream 32/41s. In 2008 it placed 75 aircraft via new leases, lease extensions and sales, and its operating loss narrowed to £17 million ($25 million), from £105 million in 2007.
Doughty concedes that "everyone is going to have their fair share of misery throughout this recession", but he believes that the company's aversion to risk may soften the blow. "BAE went through its crises in the early 1990s, as a result of which Asset Management was set up to manage this portfolio of aeroplanes, and ever since that time we've always done so on a very cautious basis. We weren't out there to just place as many aeroplanes as possible within a given timeframe."
The composition of the new business development team is itself a reaction to shifting realities. Traditionally, Asset Management's US operation has been dedicated to Jetstream business, but this is "coming to an end", says Doughty. He adds: "We've got quite a lot of expertise tied up in the US office and frankly we wanted to continue to use it.
Source: Flight International
