October 28, 2013
International Lease Finance Corp.'s (ILFC) purchase of AeroTurbine two years ago signaled a new sophistication in managing its assets. Lufthansa Technik noticed and is understood to be purchasing a 15% stake in AeroTurbine. Sources involved in the deal say the partnership will be announced this week.
The agreement, pending regulatory approval and typical closing requirements, includes AeroTurbine supplying a certain amount of material to Lufthansa Technik, Lufthansa Technik consigning surplus material to AeroTurbine, and AeroTurbine purchasing maintenance services from the German-based MRO, according to industry sources.
Expect the companies to take advantage of these reciprocal business opportunities immediately after closing.
The catalyst for ILFC purchasing AeroTurbine is really the same one that impelled Lufthansa Technik to invest in the company—the pipeline of about 250 aircraft that the leasing company has identified for retirement—and the resulting stream of material.
This pipeline helps to render the unpredictable surplus market predictable. Instead of procuring parts in the open market or on consignment, this flow of material provides AeroTurbine with the ability to chart which aircraft and engine serial numbers will be available—and when.
And because ILFC's fleet will continue to evolve, this pipeline will not shut down. Material will consistently flow into AeroTurbine's system.
This allows companies to buy used, serviceable parts, which often are a fraction of the price of new ones, in a very predictive way that satisfies operational requirements.