A consortium of Chinese investors, both public and private, purchased an 80.1% stake in International Lease Finance Corp (ILFC), the aircraft leasing arm of American International Group (NYSE:AIG), for $4.2 billion. AIG plans to retain at least 10% of its stake in ILFC while the Chinese consortium will have an option for an additional investment that will increase its ownership to 90%. The transaction is expected to close by Q2-2013. The consortium includes New China Trust, China Aviation Industrial Fund and P3 Investments. Earlier, it was also announced that ICBC and New China Life Insurance might also join the deal but since then, Bloomberg reported that neither of the two have any such plans.
In 2012, America’s aircraft manufacturing behemoth Boeing(BA) sold more than 600 planes, earned record revenues, had an impressive backlog of orders and a fourth quarter earnings that beat analysts’ estimates as the company increased its dividend by 10% and resumed its $3.6 billion share buyback program, but all of these achievements, including the company capturing the crown as the world’s largest aircraft manufacturer in 2012 from its European rival Airbus were overshadowed by the grounding of its new 787 Dreamliner due to battery failures.
General Electric (NYSE:$GE) delivered strong results for the final quarter of its fiscal year 2012. Analysts had estimated an EPS of $0.42 from revenues of $38.74 billion. The company delivered an EPS of $0.38 cents and revenues of $39.33 billion. Excluding extraordinary items, the quarterly revenues increased 3.6%. Quarterly profits increased from $3.73 to $4.01 billion year-over-year Q4-2012.
Rumors abound that one of Asia’s biggest low cost carriers, the Indonesia based privately held PT Lion Mentari Airlines (Lion Air), a traditional Boeing (NYSE:BA) customer, is planning to place another massive order of more than 200 jets, this time however, with Airbus.In late November, Lion Air’s Commercial Director Edward Sirait said “We are studying every possibility to fulfill our target for the planes from every manufacturer, including with Airbus,” The order, according to the French newspaper Dépêche du Midi, is now expected to be for 220 Airbus A320 Neos and will be officially announced on 17th January when Airbus releases its annual sales figure.
Singapore Airlines has been looking to sell its 49% stake in Richard Branson’s flagship carrier Virgin Atlantic and Delta (NYSE:$DAL) is one of the companies who are looking to buy that share. Mr. Branson will be keeping his controlling stake. He also wants to increase operations on the U.S – U.K route and by partnering with Delta he can achieve this objective. Although Delta has operations all around the world it has very little presence at the one airport that matters – London Heathrow. The slots at this primary Trans-Atlantic destination, where British Airways is the number one operator with 39% of the total passengers (2010 data), are rarely available as it operates at full capacity.
Peter Pham is an author, international fund manager, and a registered financial director by the Cayman Monetary Authority (CIMA). In 2013 he published his first book entitled, The Big Trade: Simple Strategies for Maximum Market Returns. He currently manages the portfolio of a global hedge fund and runs an asset management company, Phoenix Capital. (read more)
The Big Trade: Simple Strategies for Maximum Market Returns
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