GreenBkk.com Aviation | Mix of buying, leasing seen as best choice for THAI

Mix of buying, leasing seen as best choice for THAI

Published: 29/04/2011 at 12:00 AM

Thai Airways International is right to consider using a mix of leasing and buying to acquire its new fleet of 75 jetliners over the next 12 years, say Boeing and International Lease Finance Corp (ILFC).

The Transport Ministry believes the national carrier would save costs over the long run by buying the aircraft.

However, the cabinet last week gave THAI a free hand to decide how to structure the acquisitions, as long as it stays within its budget of 457.12 billion baht.

Both acquisition methods have merit, said John Wojick, vice-president for Asia-Pacific commercial airplane sales for Boeing and ILFC vice-president Chi Yan.

Mr Chi said there were no ''magic formula'' as to how many aircraft should be leased from lessors and how many should be bought outright from manufacturers.

There are several financial factors, including costs involved, cash flow and capital intensity, which THAI must con sider in deciding the optimum numbers, he added.

''If you had a lot of money, the ideal means is to buy the aircraft outright,'' Mr Wojick said in Bangkok.

As a manufacturer, Boeing would be happy to make an outright sale, but that may not allow THAI to take advantage of the merits offered by leasing, especially in not having capital tied up and in maintenance, he said.

He noted that Southwest Airlines, probably the world's most successful no-frills carrier, used leased aircraft.

About 40% of the aircraft flown by airlines around the world are leased and 60% purchased, he noted.

The two executives were in Bangkok this week to talk with senior THAI management about acquisition options.

The Boeing team was led by Ralph Boyce, president of Boeing Southeast Asia and a former US ambassador to Thailand.

The cabinet-approved plan envisions a two-stage acquisition plan: 37 in the first phase between 2011 and 2017 with a budget of 210.6 billion baht, plus spare engines worth 5.47 billion baht, for a total of 216 billion baht.

Another 38 planes would arrive from 2018-22 with a budget of 229 billion baht, plus spare engines worth 11.98 billion baht for a total budget of 241.05 billion.

ILFC has ordered 75 B787 Dreamliners from Boeing in anticipation that the leasing demand for the fuel-efficient carbon-fibre jetliner will be high.

Credit: Bangkok Post (www.bangkokpost.com)