US leasing giant says it is not interested in acquiring unit, preferring organic growth
US leasing and finance giant CIT Group has all but ruled itself out as a potential suitor for Morgan Stanley’s aircraft leasing arm AWAS. Company executives indicate that it is more likely to focus on organic growth to achieve its aim of expanding its business by around 10% a year.
Morgan Stanley is seeking buyers for AWAS, which has an aircraft portfolio worth an estimated $4 billion, as it looks to focus on its core businesses. Speaking at the opening of its CIT Aerospace aircraft leasing division’s international arm in Dublin last week, CIT Group chief executive Jeff Peek said that, while the company is “always looking” at opportunities, he thought it was unlikely to bid. “I don’t think you’ll see us being a bidder,” he said. “We like to have young aircraft and the average age of the AWAS fleet is almost double ours.”
CIT Aerospace president Jeff Knittel said the company’s portfolio of over 300 aircraft, which is valued at “more than $6 billion”, has an average age of around six years. “If anything, I think it will get a little younger,” he added.
Knittel expects the aerospace division’s capital generation to grow at around 10% a year. Non-US customers account for 85% of CIT’s portfolio and, given the relatively poor health of the US sector, Knittel expects CIT’s business to continue to be “predominantly outside North America”. This has prompted the creation of its Dublin-based international arm, headed by managing director Frank Pray.
“We’ve transferred 46 aircraft to CIT Aerospace International and six more will be added as they are delivered by yearend,” said Pray. “The division’s portfolio is worth 1.2 billion [$1.45 billion] now and will grow to more than 4 billion by 2008.”
The international division’s portfolio currently accounts for around 20% of the entire aerospace range, but Knittel expects this will eventually be “more than 50%”.
MAX KINGSLEY-JONES/DUBLIN
Source: Flight International
