April 10, 2019

Japanese money driving aircraft finance market

Re-emergence of Japanese investors as pacesetters in aviation finance has been reaffirmed with the latest round of M&A deals, aircraft orders and Jolco (Japanese operating lease with call option) financings. Michael Marray reports from Frankfurt

As had been expected in the market, on 1 March DVB Bank signed an agreement with MUFG Bank, a subsidiary of Mitsubishi UFJ Financial Group, and BOT Lease Co, an affiliate of MUFG, for the sale of DVB’s aviation finance division.

A few days later, Newport Beach, California-based lessor Aviation Capital Group (ACG) announced that it has received an additional $200 million investment from minority shareholder Tokyo Century Corporation.

Tokyo Century, which is a prominent arranger of Japanese operating leases (JOLs) and Jolcos, acquired an initial 20% stake in the company in December 2017, which has now increased to 24.5%.

Pacific Life Insurance Co will retain a controlling interest in ACG.

These deals follow last year’s acquisition by Orix Corporation of a 30% stake in lessor Avolon, being sold by HNA Group.

And early this year, Japan’s largest operating lessor, SMBC Aviation Capital, announced an order with Airbus for 50 A320neo and 15 A321neo aircraft with a list price of $7.4 billion.

Meanwhile, the JOL and Jolco markets continue to boom.

In a recent filing, Financial Products Group (FPG) said that it had built up a big inventory to be placed in the busy final quarter of the Japanese fiscal year, which ended on 31 March.

Analysts expect to see more innovative debt structures, following on from Jolcos that were combined with enhanced equipment trust certificates (EETCs), Aircraft Finance Insurance Consortium (AFIC) debt, and UK Export Finance (UKEF)-supported debt.

This year Jolcos are likely to be closed with debt insured under the Airbus Balthazar project, which is being coordinated by Marsh Europe.

Jolco tax equity investing is mainly provided by small and medium-sized enterprises (SMEs), as listed companies are not able to access the product.

Larger investors can execute JOLs, and some are looking around for new opportunities to gain exposure to aircraft at a time when yen benchmark rates remain below zero, and where the betting on the next move by the US Federal Reserve is shifting towards a rate cut.

The trend is the same in the Eurozone.

In late March the yield on 10-year German bunds once again fell below zero — the first time this has happened in approximately 16 months.

Clearly the search for yield is going to continue, and Japanese investors that have built up expertise in aircraft are looking for new products.

The asset-backed securities (ABS) market is an area of interest.

Up to now Japanese investors have played little or no role purchasing the E-notes on aircraft ABS transactions, which provide the economic equivalent of an equity return.

Sophisticated Japanese investors are expected to move into the E-note market over the course of 2019.

New Jolco alliances

There are also new alliances being formed by Jolco arrangers and asset managers in Europe and the US, adding to existing tie-ups between Fuyo General Lease and ALM, FPG with Amentum, Tokyo Century with ACG, and Amsterdam-based Arena Aviation Capital with JP Lease Products & Services.

ABL Aviation and SBI Group teamed up in an exclusive partnership to offer aircraft investment opportunities to the Japanese investor market using JOLs and Jolcos.

ABL Aviation is a specialist aircraft investment firm founded in 2014, with offices in Dublin, New York, Casablanca, Hong Kong and Dubai.

Tokyo-based SBI Group is one of the largest distributors of financial products in Japan, and is an active player in the JOL/Jolco market.

The two companies have indicated plans to build this business up to $1 billion within two years, focusing on new and midlife aircraft in both the passenger and freighter segments.

“Both the JOL and Jolco markets are seeing tremendous investor appetite,” commented Masahiro Kaito, chief executive officer (CEO) of SBI Leasing Services.

“In the Jolco market, high demand from Japanese equity investors is leading to many new airlines, as well as aircraft leasing companies, entering this market.

SBI Leasing Services and ABL Aviation intend to take advantage of this demand and identify suitable transactions for its investors,” he stressed.

“Recent large Jolco transactions with high-quality airlines, like Vietjet, Ethiopian, Emirates and SAS demonstrate the insatiable equity appetite in the Japanese tax lease market,” added Ali Ben Lmadani, CEO of ABL Aviation.

“The JOL market, too, remains robust and more players are entering this market.

We look forward to expanding our JOL and Jolco investments with the help of the SBI network of banks.”

“The variety of airlines and aircraft types acceptable to Japanese equity investors continued to broaden over the year, and there was a steady flow of Jolco transactions throughout the entire Japanese financial year, which ended on 31 March,” commented James Cameron, co-head of the transportation and space group at law firm Milbank in London.

“We are also seeing more deals where Japanese equity is combined with capital markets debt,” he added.

In March 2018 Milbank acted as counsel to Citi on the second transaction for British Airways that features EETC debt alongside Jolco equity.

Citi was sole structuring agent, global coordinator and joint bookrunner for the EETC deal.

Deutsche Bank and JP Morgan were joint active EETC bookrunners and BBAM was structuring agent for Nomura Babcock & Brown (NBB) and Jolco equity investors.

The $870 million transaction combined Jolco equity with proceeds of the British Airways 2018-1 EETC.

The transaction provided financing for 11 aircraft, including two B-787-8s, two B-787-9s and seven A320neos.

“The size of last year’s British Airways transaction illustrates that, in addition to deals with one or two aircraft, Jolco arrangers also like to do large volume deals in an environment in which demand from equity investors is very strong,” according to Cameron.

NBB benefits from the distribution capabilities of Nomura, Japan’s largest securities firm.

NBB works in close coordination with BBAM Aircraft Management to create investment programmes tailored to Japanese investors.

In March 2018, BBAM-managed entities FLY Leasing Ltd, Incline B Aviation Ltd Partnership, together with NBB, acquired the AirAsia leasing operations.

A wholly owned subsidiary of AirAsia Bhd (AAB), Asia Aviation Capital (AAC), sold the aircraft leasing operations for a total disposal consideration of $1.18 billion, valuing AAB at an enterprise valuation of $2.85 billion.

The buyers will eventually acquire 84 aircraft and 14 engines.

The transaction also had a complex forward-looking component involving the sale and potential sale of yet-to-be delivered aircraft to FLY and Incline of just under 100 aircraft.

AAB received both cash and non-cash consideration, resulting in AAB owning a stake in both FLY and Incline.

Milbank advised AAB.

Chinese money

From 2015 to 2017 Chinese money was the dominant force in aviation finance, notably with HNA Group’s acquisition of Avolon, which in turn bought CIT Group’s aircraft leasing business.

President Xi Jinping, however, became alarmed by the rapid buildup of debt  associated with overseas acquisitions, and by Summer 2017 clamped down on overseas M&A.

The government pressured companies, such as insurer Anbang and HNA, to sell assets and deleverage.

Last year there was a fall in Chinese-led takeovers across all sectors.

As Berlin-based think tank Merics noted in a recent report, Chinese global investment into Europe dropped off sharply in 2018, partly due to political backlash in the EU against Chinese takeovers, but was “due mainly to continuing capital controls and lower liquidity in China’s financial system.”

Aircraft leasing still remains a major business for the big Chinese state-owned banks, and is still an activity looked on favourably by the government as part of its Belt & Road Initiative.

With Chinese money no longer pushing all else aside, however, it is the Japanese that have stepped up.

Unlike China, which had a national strategy for state-owned banks to engage in aircraft leasing, which then itself became part of the Belt & Road Initiative, Japan has no guiding national strategy for its current push into aircraft.

Japan is, however, very wary of the Belt & Road Initiative.

Changes to the tax code outlined late last year have caused concern in the market.

As Japanese companies rapidly build up aircraft finance activities, however, whether through bank lending, Jolco arranging or operating leasing, it would have been a bad time to impose radical change on the JOL/Jolco industry in the way it once did with the now-outlawed Japanese leveraged lease (JLL), and the JOL that was reformed to become the Jolco.

The sale of DVB Bank to MUFG is another milestone for the aviation finance industry, as it marks the departure from the market of the last major German aircraft finance specialist.

German banks dominated 

It was German banks that dominated the aircraft finance industry in the 1990s (with the help of triple-A-rated landesbank funding), taking over from the Japanese after the 1980s asset bubble burst.

As the triple-A landesbank guarantee was phased out, however, so the German players pulled back.

In May 2005, ACG announced that it had signed a deal to acquire Seattle-based Boullioun Aviation Services from Westdeutsche Landesbank (WestLB).

Included in the agreement were 102 owned or managed commercial aircraft, plus the team.

Boullioun in turn owned a stake in Singapore Aircraft Leasing Enterprise (SALE) that it founded in 1993 along with flag carrier Singapore Airlines.

In 1997 Singapore state investor Temasek Holdings and Government of Singapore Investment Corporation (GIS) each acquired a 14.5% stake in SALE.

In 2006 SALE was sold to Bank of China, becoming BOC Aviation.

Already in 2005 Debis AirFinance, a subsidiary of DaimlerChrysler and major German banks, had been acquired by private equity firm Cerberus Capital and renamed AerCap Holdings.

HSH Nordbank exited aircraft finance in 2011, having been rescued with taxpayer money after the financial crisis.

WestLB also needed state aid, and was broken up in 2012.

Norddeutsche Landesbank (NordLB) is still active in aircraft lending, although activity in that sector has been reduced.

NordLB is being restructured after being hit hard by bad shipping loans, and is currently up for sale.

Even Commerzbank and Deutsche Bank have reduced aviation business exposure.

Commerzbank was rescued by the government after the financial crisis, and nowadays mostly participates on debt deals involving one or two aircraft.

Deutsche Bank views aviation lending as part of relationship banking, but it too has been weakened as a series of internal strategic changes have failed to deliver.

The poor performance of Deutsche Bank and Commerzbank is reflected in a low combined market capitalisation.

As of 18 March this stood at 26.5 billion, ranking 16th for European banks.

The figure for Banco Santander was 71 billion, and for BNP Paribas 55 billion.

The German government has been encouraging a merger between Deutsche Bank and Commerzbank, although many analysts fail to see much strategic sense to the proposed combination.

At time of going to press, unions were warning of 30,000 job losses in Germany, and there is strong opposition to what is seen as government meddling in the banking sector.

Although it never had to be rescued, and emerged from the financial crisis looking better at risk management than its peers, DVB Bank was hit hard by writedowns on shipping and offshore loan portfolios.

DVB Bank’s owner, co-operative banking group DZ Bank, finally lost patience and decided to sell up.

The aircraft portfolio went to MUFG, with Helaba acquiring the 1.4 billion land transport portfolio.

DVB Bank sale

On 1 March MUFG and consolidated subsidiary MUFG Bank announced agreement on the purchase and transfer of DVB’s aviation finance division to MUFG Bank and BOT Lease Co, an affiliate of MUFG Bank.

The asset purchase agreement provides for the entire aviation finance client lending portfolio (approximately 5.6 billion as at 30 June 2018), employees and other parts of the operating infrastructure to be transferred to MUFG Bank Ltd.

The transaction also includes the acquisition of DVB’s aviation investment management and asset management businesses, which will be transferred to a newly established subsidiary of BOT Lease.

The transaction is expected to be completed during the second half of 2019.

“Aviation finance is a key growth pillar for MUFG and this acquisition will see a step-change in our ability to offer bespoke solutions to our clients,” said Masato Miyachi, MUFG’s senior managing corporate executive.

“We are excited to be welcoming lots of experienced professionals to our established team, enabling us to broaden our customer base and cement our position as a leading player in this space.

This acquisition is expected to enhance our global CIB business platform in terms of higher returns, portfolio diversification and solution offering to our clients.”

Acquisition of the DVB unit will give MUFG access to a large new pool of client relationships in the lending market in which it is increasingly active.

For example, in late February, ACG announced that it has structured, arranged, and provided a guarantee of a loan by MUFG Bank to finance a portion of the purchase price of one B-747-8F aircraft delivered to AirBridgeCargo Airlines (ABC), part of Volga-Dnepr Group.

The ABC financing utilised ACG’s Aircraft Financing Solutions (AFS) programme, which complements the lessor’s operating lease business by providing customers with cost-effective aircraft financing.

“Not only is this the first aircraft transaction funded under the AFS programme, but ACG was awarded the financing mandate less than two months ago,” according to Bob Roy, managing director of ACG, speaking after the transaction closed.

“Together with the cooperation and hard work of ABC and MUFG, which also provided critical input on structuring the loan, the AFS team was able to successfully structure and arrange this financing in a very compressed time period.”

“MUFG is very pleased to support ACG for the launch of this important initiative, and to assist ABC with the financing of the B-747-8F aircraft.

“MUFG is very proud to have assisted ACG in structuring this innovative new product and to continue the long relationship between our two institutions,” said Olivier Trauchessec, head of transport finance for the Americas at MUFG.

MUFG has multiple subsidiaries engaged in aircraft lending and leasing.

The Mitsubishi UFJ Financial Group Inc (MUFG) was formally created in 2005 with the merger of Mitsubishi Tokyo Financial Group (which included Bank of Tokyo-Mitsubishi) and UFJ Group.

Companies within MUFG include MUFG Bank, Mitsubishi UFJ Trust and Banking Corporation, Mitsubishi UFJ Securities Holdings, MUFG Americas Holdings Corporation and BOT Lease Co.

Lessor Jackson Square Aviation (JSA) became an Mitsubishi UFJ Lease & Finance subsidiary in 2013, and in July 2018 JSA signed an order for 30 B-737max8s, to be delivered between 2023 and 2025.

Ownership of JSA helps MUFG source aircraft for investors, and in August 2018 London-based alternative investment specialist Floreat appointed MUFG to source a portfolio of aircraft on lease to airlines around the globe.

MUFG will arrange debt financing of the $500 million portfolio, with Floreat and its clients providing the equity.

Jolco final quarter

As the market awaits results of the traditionally busy January-to-March Jolco arranging period — the final quarter of the Japanese fiscal year — leading arranger FPG has been busy.

FPG is an independent financial services firm listed on the Tokyo Stock Exchange.

In January, FPG announced that it has entered into committed credit line agreements with financial institutions for flexible procurement of project funds for its lease arrangement business.

FPG will enter into a new committed credit line agreement with Mizuho Bank for a ¥10 billion ($90 million) funding facility to arrange aircraft lease business projects.

Like most arrangers that place Jolco equity, FPG has a foreign asset manager to help source aircraft and also remarket aircraft in JOL structures.

The boom in the Jolco and JOL markets has been the driver behind the acquisition of European asset management companies by Japanese buyers.

In November last year, FPG and FPG Amentum, the Dublin-based aircraft leasing and management company, announced acquisition of an A320-200 aircraft.

The aircraft was acquired from another lessor at delivery from Airbus and is on lease to Japan’s All Nippon Airways (ANA).

In February, FPG and FPG Amentum acquired a B-777-300ER aircraft from another lessor, which is on lease to Taiwanese flag carrier China Airlines.

Also in February, FPG and FPG Amentum announced acquisition of two B-737max8 aircraft via sale and leaseback transactions with Tui Group subsidiaries.

In March, FPG and FPG Amentum announced acquisition of one A321-200NX aircraft via a sale and leaseback transaction with Wizz Air Group.

And also in March the two companies announced acquisition of an A320-200 from another lessor at delivery from Airbus, on lease to ANA.

Fuyo General Lease acquired its UK-based asset management company ALM back in 2014 as a wholly owned subsidiary, to help source aircraft and act as manager on Jolco and JOL deals.

FGL is a JOL and Jolco arranger, but is also growing its self-owned portfolio.

In a recent presentation FGL said, “We aim to increase the number of airlines and countries with which we do business, partly by further leveraging ALM of the United Kingdom.”

Last July, ALM added one new A320neo aircraft to its managed portfolio, under a Jolco arranged by FGL.

The aircraft is operated by Iberia.

In August ALM added a fourth new A321neo to its managed portfolio.

The aircraft was acquired by FGL at delivery from Airbus, and is leased to ANA.

And during the same month, ALM added another ANA A321neo, the third leased to the carrier.

In September, ALM added two new A320neos to its managed portfolio.

The aircraft were acquired by FGL, subject to leases with Indian low-cost carrier IndiGo, and were the first A320neos acquired by FGL, and the company’s first leases with an Indian operator.

ALM monitored technical acceptance of the aircraft from Airbus Hamburg on behalf of FGL.

And last December, ALM added two further new A320s to its managed portfolio.

The aircraft were acquired by FGL from Airbus, and are subject to lease to Japan-based low-cost carrier Peach Aviation.

ALM again monitored technical acceptance of the aircraft from Airbus in Toulouse and Hamburg.

Arena Aviation Capital

Amsterdam-based Arena Aviation Capital also has a Japanese partner, and has been building up its midlife portfolio, suitable for the JOL market.

In September 2017, Japan Investment Adviser (JIA), parent company of JP Lease Products & Services Co Ltd (JP Lease), and Arena announced the launch of a joint venture through which JIA took a minority stake in the Arena platform.

During 2018, Arena originated, structured and executed for its investor client base the acquisition of 15 aircraft and one aircraft engine with a total market value of approximately $420 million.

Over the course of the year, Arena sourced a series of deals suitable for funding through the JOL market.

Apart from trades with other lessors, Arena increased the proportion of sale and leaseback transactions.

Arena added some new airline customers to its managed portfolio, including Iberia, Aeromexico and Air Canada.

With the current pipeline of deals that are about to close, Arena expects the portfolio to grow to 60 aircraft by the end of the first quarter of 2019, reaching a milestone AUM (assets under management) of approximately $2 billion.

“We had to look and work harder to find the right deals for our investors during 2018, with more competition appearing in the midlife aircraft segment,” said Erik Dahmen, founding partner and marketing director at Arena.

“We definitely see growing acceptance of the aircraft investment asset class, and we expect asset yields to remain attractive.

“We definitely expect a continuing increase in demand for our bespoke investment management services.”

While Amsterdam will remain its home base, Arena management is planning this year to establish offices abroad.

“Our platform is now mature and provides for significant capacity to scale up and grow,” said Patrick den Elzen, founding partner and managing director at Arena.

The company is considering options and strategies for accelerated growth, and opening offices in Ireland and/or Asia is likely to be part of that strategy.

Other JOL and Jolco arrangers are also reporting an increase in business, including Tokyo Century with its increased stake in lessor ACG.

Tokyo Century already works closely with Fort Lauderdale, Florida- based GA Telesis, in which it has held an investment since 2012.

Last October, GA Telesis completed a share purchase by Tokyo Century and All Nippon Airways Trading Co (ANATC) from Global Principal Finance.

Tokyo Century now holds a 49.2% stake, and ANATC holds 10%.

Then in December, GA Telesis announced that, together with shareholders Tokyo Century and ANA Trading Corporation USA, a subsidiary of All Nippon Airways Trading Co, it has formed Gateway Engine Leasing, to capitalise on rising demand from airlines worldwide for long-term jet engine leases.

Initially headquartered out of Fort Lauderdale, Gateway has plans to rapidly expand to Europe and Asia.

Jolco boom

Privately held Yamasa has provided Jolco equity on a long series of transactions, including deals for Panamanian flag carrier Copa Airlines and Aeromexico.

And NTT Finance not only arranges Jolco equity, but can also provide debt, which it has done on Aeromexico B-787-9s.

Orix Corporation, which acquired the 30% stake in lessor Avolon from HNA Group subsidiary Bohai Capital, also has good access to Japanese tax equity.

Orix entered the aircraft finance lease business way back in1978, and in 1991 established Orix Aviation.

Orix Aviation has grown to be a major lessor, asset manager and trading company.

In addition to leasing its own portfolio aircraft, Orix Aviation focuses on developing an asset management platform that attracts both Japanese and international investors.

For major operating lessors, financing some new deliveries via Jolcos can be an attractive option.

In addition, major players have large portfolios of midlife aircraft that can be traded to balance portfolios.

These aircraft can be packaged up to suit JOL investors.

SMBC Aviation Capital has highlighted the attractiveness of the JOL market to trade midlife aircraft.

In the new aircraft segment, SMBC is capable of conducting sale and leasebacks  on large packages of aircraft — often with pre-delivery payment (PDP) financing.

In February, SMBC announced its first sale and lease back transaction of 2019.

The deal with Mexican low-cost carrier Viva Aerobus also provides a PDP facility for seven A320neo aircraft.

And SMBC’s January signing of the $7.4 billion (list price) order for 50 A320neos and 15 A321neos demonstrates the company’s commitment to further growth.


The decision by Airbus to discontinue production of the A380 aircraft is a major blow to investors in retail funds that were sold in Germany.

The announcement was made on 14 February to coincide with a $21.4 billion order from Emirates for 40 A330-900 and 30 A350-900 aircraft in a heads of agreement signed with Airbus.

The A330neo and A350 aircraft, will be delivered to Emirates, starting from 2021 and 2024 respectively.

In addition, it was announced that Airbus and Emirates had reached an agreement on outstanding A380 deliveries.

The airline will receive 14 more A380s from 2019 until the end of 2021, taking the carrier’s total A380 order book to 123 units.

Airbus delivered two of three A380 aircraft on order to All Nippon Airways (ANA) in March, with the last aircraft scheduled to deliver later in 2019.

News that A380 production is on the way out has triggered another flurry of activity — from German law firms launching class action suits against closed-end aircraft fund arrangers and distributors.

The initial funds were sold in the buoyant financial markets in the run-up to the 2008 financial crisis, and were fully placed very quickly.

These funds have already reached the date of the first lease expiry without penalty, and last year Singapore Airlines began returning aircraft.

One A380 was remarketed by Doric to Lisbon-based charter operator HiFly, and a second is being broken up for parts.

More funds followed after the financial crisis, as central banks slashed interest rates, and investors were searching for yield via alternative investments, such as aircraft and wind farms.

In 2010, Hannover Leasing came to market with an A380 fund, Flight Invest 49, involving Singapore Airlines.

In 2012, Hannover Leasing sold another fund, Flight Invest 50, this time with Emirates as lessee.

In 2011, an A380 fund featuring Singapore Airlines and arranged by Lloyd Fonds saw placement proceed very slowly.

Eventually an institutional investor was brought in to complete equity placement.

In 2012, WealthCap Aircraft 25 featured Singapore Airlines, which signed an initial lease for 10 years, with various extension options of up to five years.

EastMerchant is asset manager.

Minimum participation was $10,000 and the equity was fully placed.

Munich-based WealthCap is a wholly owned subsidiary of UniCredit Bank.

In 2013, WealthCap 26 also involved Singapore Airlines, with the same $10,000 minimum participation, and the fund was also fully placed.

The fund has a forecast 15-year life with lease extensions, but the carrier can return the aircraft without penalty after 10 years, in late 2023.

Debt was provided by Helaba for the two widebody aircraft.

There were also four A380 funds sold featuring Air France, two where placement began in 2009, and then one in 2010 and one the following year.

Investors in these funds are now looking ahead anxiously to the first lease expiry.

Many of the funds were sold with an initial 10-year lease term, however investors tended to look at one or two lease extension options, taking the life of the fund out to 15 years.

As an example, Dr Peters fund DS 135 features an initial 10-year lease contract with Air France running through to February 2020.

Air France announced last November that the carrier is returning five of its total fleet of 10 A380 aircraft.

Most of the five are held by German retail funds, and Air France will not renew its lease extension options which come at the 10-year point.

Two of these leases feature expiry dates in 2020, and German law firms are already offering services to claim compensation from the appropriate arrangers.

Focus is on Emirates

The biggest question mark is of course Emirates, which has been a regular user of the German retail market.

The carrier’s first A380 deal was Flugzeugfonds 6 from Doric in 2009.

Then came the series of four Sky Cloud deals from Hansa Treuhand, sold between 2009 and 2011.

At least 17 Emirates A380 aircraft feature first lease expiry without penalty dates between December 2022 and October 2025.

As far and away the biggest operator of the A380, Emirates is unlikely to phase the model out — which is easier to do for carriers with smaller A380 fleets, such as Air France and Lufthansa.

Emirates could keep some of these aircraft beyond the first lease expiry date, although the carrier has tended to adhere to a strategy of keeping a very young fleet.

Some of these aircraft are in the Doric Nimrod Air (DNA) institutional funds listed on the London Stock Exchange.

Doric Nimrod Air Two owns seven A380s on lease to Emirates, and Doric Nimrod Air Three owns four A380s leased to Emirates.

In the case of Dorc Nimrod Air Three, the initial lease term is 10 years, with an option for a two-year extension, although with some penalties if Emirates decides to exit after 10 years.

Amedeo reaches agreement 

The Amedeo Air Four Plus fund is diversified both in terms of aircraft type and airlines, and generally features initial 12-year leases.

The fund owns four A350 aircraft on lease to Thai Airways International, and two B-777s leased to Emirates.

The fund also owns eight A380s, of which two are leased to Etihad Airways and six to Emirates.

In the case of this fund, the initial assets acquired were on 12-year leases.

The question facing the carrier here is different to the German retail market.

With well-known asset managers and pension funds as investors, carriers may be more willing to reach agreement on releasing an asset at the end of the lease term to preserve institutional relationships.

In contrast, German retail investors will hardly be a priority.

Amedeo issued a statement on 14 February, estimating that the long-term core Emirates A380 fleet will comprise in excess of 100 A380 aircraft, which are expected to continue to be operated by Emirates for the entirety of their useful economic lives.

With respect to Amedeo’s own purchase agreement with Airbus for 20 A380s (originally announced at the Paris Air Show in 2013), Amedeo noted a termination agreement signed with Airbus.

Amedeo has indicated that discussions are ongoing with the aircraft manufacturer regarding other commercial options.

Lufthansa, which likes to keep ownership of its fleet, never accessed the German retail fund market.

Lufthansa plans to sell six of its 14 A380s back to Airbus, with the aircraft leaving the fleet in 2022 and 2023.

Lufthansa said that the two parties have agreed not to disclose the purchase price.

This announcement came as Lufthansa signed an order for A350-900s.

“By replacing four-engine planes with new models, we are laying a sustainable foundation for our future in the long run.

“In addition to the cost-effectiveness of the A350 and B-787, the significantly lower CO2 emissions of this new generation of long-haul aircraft was also a decisive factor in our investment decision.

“Our responsibility for the environment is becoming more important as a criterion for our decisions,” said Carsten Spohr, chairman and CEO of Lufthansa Group.