PRESS RELEASE    30-10-2007

FROM CHINA TO MAURITIUS: DORIC CONTINUES AIRCRAFT LEASING PROGRAMME

Mark Hackforth-Jones speaks at China Aeroleasing Summit, Beijing
Mark Hackforth-Jones, an aviation industry specialist at Doric, was a speaker at The China Aeroleasing Summit in Beijing. The conference focused on the aircraft finance needs for China's fast growing airline industry, and how they will be met. Indeed, it is estimated that China alone will require 3,400 new aircraft over the next 20 years, worth USD 340 billion.

Mr. Hackforth-Jones stated that he thought the major Chinese airlines could be well suited to the long-term operating lease product that Doric has developed for investors, in just the same way as airlines like Virgin Atlantic in the UK or Emirates in the United Arab Emirates, both of whom have agreed long-term leases with Doric in the last year or so. ‘Due to the inherent cyclicality of the aviation industry, our long-term leases of 10 to 15 years are a proven strategy for securing attractive returns while minimizing risk’ Mr. Hackforth-Jones commented.

Doric continues aircraft leasing programme with two A330-200s
Recently, the company has agreed to purchase two Airbus A330-200s on attractive terms for long-term lease to Air Mauritius. The A330-200 is one of Airbus’ most successful mid-range planes and is now offered in both cargo and passenger variants. Its wide-spread popularity with airlines makes this plane an ideal leasing asset. There is a large global market for the passenger version of the A330-200, which is presently operated by 49 airlines around the world. Together with the shorter range, higher density A330-300 model, there have been orders for some 758 passenger version A330s since launch.

The A330-200 transaction reflects Doric’s clear line on aircraft leasing: a long-term lease, coupled with conservative leverage (up to a maximum of 60% loan to value) allows for a substantial amortisation of the debt over the initial fixed lease term. This facilitates greater flexibility at the end of the initial lease, as the financing constraints are minimal (if any) enabling greater value creation in the re-leasing phase. Moreover, as the debt is rapidly amortised through the initial lease term, there is potential for an opportunistic sale of the aircraft, taking advantage of the inherent cyclicality of the industry in order to achieve maximum profitability.

Throughout the lease term, maintenance obligations in the lease contracts provide the security that the aircraft is well maintained and eventually returned in good condition. The aircraft condition and maintenance status are carefully monitored by Doric through ongoing review of lessee operational data backed up by periodic aircraft inspections and when the aircraft undergoes major checks. At expiry of the lease the aircraft is required to be re-delivered in the condition required by the lease so that it can be moved on to the new lessee with a minimal level of intervening maintenance and reconfiguration work.

Re-leasing
Another consideration for any aircraft investment is the possible need to alter or refurbish the cabin interior at the end of the initial lease. There are three main scenarios here: The first is that the aircraft remains with the same lessee, making it unlikely that cabin remodelling will be necessary. The second scenario is that the new lessee may want a complete refurbishment to accord with its own branding requirements. In such a case, the re-lease rents are, in normal market conditions, increased to offset the cost of such refurbishment so the underlying rental return to investors will remain unaffected as the new lessee will effectively bear the cost of the refurbishment. Given the low level of leverage in the transaction, it is relatively easy to raise incremental debt funding to cover any potential cabin refurbishment cost. At the other end of the scale, a second or third tier, or charter operator, may be happy to keep most of the existing airline fittings. The Air Mauritius A330-200 configuration, for example, is rather standard with 24 business class and 251 economy class seats.

Boeing estimate that over the next 20 years some 28,600 new aircraft will be required to replace 80% of the current world fleet. This is driven principally by the demand for air travel from Asia, whose share of world traffic demand is expected to rise 40% in the next 20 years. Doric aims to undertake further new generation aircraft acquisitions with long-term leases attached to enable our investor base to benefit from this massive demand.

Doric Asset Finance offers investments in real assets – including aircraft, ships, commercial real estate and renewable energy.
Doric’s management and team have been working in aircraft leasing since the early 90s and have arranged transactions for various aircraft types and lessees (including Iberia, Lufthansa, Virgin Atlantic, Emirates, Austrian Airlines and United Airlines). Doric also structures and arranges closed-end funds for institutional investors and for other distributors. The company now has ten aircraft under asset management.

Press Contact: Sarah Glienke, Press and Communication, Doric Asset Finance
Email: sarah.glienke@doricassetfinance.com | Tel: 020 7621 6515