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Chinese Company Places Huge Order for Airbus Jets

Tuesday, 15 Jan 2013 | 4:11 AM ET
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Airbus

BOC Aviation, the aircraft leasing arm of Bank of China, has placed its largest ever order to buy 50 A320 family jets from Airbus at a list price of $5 billion.

"After a couple of years of depressed market conditions, we are beginning to see that the market is turning," Robert Martin, BOC Aviation's Managing Director and Chief Executive Officer, told Reuters in a telephone interview on Tuesday.

"Now we are replenishing our pipeline. This is a leasing company. You want a pipeline of orders to grow your business going forward," he said.

The deal, which includes 25 new engine options (NEOs), comprises A320 and A321 variants with delivery scheduled from the second half of 2014 to the end of 2019.

"The A320 NEO family order reinforces our commitment to be a key player in the leasing industry," Martin said.

Including this deal, BOC Aviation's outstanding orders for new aircraft total 100, including planes from Airbus, its major rival Boeing, and Embraer SA.

(Read More: Airbus to Boeing: My Plane Is Better Than Yours)

It also has 26 planes in the pipeline from purchase and lease back deals.

The list price of the deal is around $5 billion, but large orders typically involve substantial discounts on that price.

BOC Aviation's assets are expected to rise by 25 percent to $10 billion in mid-2013 from $8 billion at the end of June 2012, Martin said.

Cash-rich Chinese investors want greater exposure to the international aircraft leasing market.

Last month a Chinese consortium led by New China Trust agreed to buy nearly all of American International Group's aircraft leasing business ILFC for $4.8 billion.

(Read More: Supply Chain Risks Still Loom for Aircraft Manufacturers)

The global aviation market will need $4 trillion of new aircraft over the next 20 years, according to estimates from Boeing. Around half of those new planes are expected to be owned by leasing firms, and China will be a major growth market.

BOC Aviation, known as Singapore Aircraft Leasing Enterprise (SALE) until Bank of China bought the Singapore-based company in 2006, is due to celebrate its twentieth anniversary this year.

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