Firm foresees change in future market and is confident of securing 5-10% of business
Transport financing specialist DVB Bank envisages jet engine funding being split from airframe deals in future as more players enter the engine finance market.
DVB Bank launched its own Aero Engine Finance Unit last month, joining a sector dominated by engine manufacturers and third parties, including Willis Lease Finance, Dana Lease Finance (DLF) and the Royal Bank of Scotland (RBS).
Bert van Leeuwen, DVB Bank's head of aviation research, says the unit will concentrate on financing spare engine lease deals, which make up 10-12% of all engine sales, but adds that the future shape of aircraft finance deals may evolve to permit the separation of engines from airframes.
"Once aircraft finance deals no longer include engines, then we're no longer talking about only 10% of the market, but we can tackle the installed base too," he says.
The bank, which has completed its transition from a general commercial bank to a specialised transport financing firm, has decided to create the new unit in anticipation of such a market shift.
"You need to position yourself early enough to take advantage when the market opens," says DVBBank chairman Wolfgang Driese.
Van Leeuwen estimates the spare engine business generates about $1.75 billion a year in revenues and DVB Bank expects to be one of the top five players, with 5-10% of the market.
DVB Bank says it is in talks with a "third-party engine technical specialist" with which it expects to sign "an umbrella agreement" to monitor the maintenance condition of engines financed through the new unit.
"We recognise that you can't just jump into the market, you need to look at the nuts and bolts, and to do that we will need to build a team of partners from OEMs [original equipment manufacturers] to maintenance providers to engine leasing companies," says van Leeuwen.
Eventually the Aero Engine Finance Unit may move to leasing engines itself, say
JUSTIN WASTNAGE / LONDON
Source: Flight International
