Analysis: Lessors lead rush to finance huge Air India jet order

As global aerospace savours a record Air India 500-plane deal cheered by world leaders, it is the turn of leasing companies to line up for a piece of the action. Experts say the mainly Dublin-based lessors, who rent jets out for a monthly fee, could play a significant role in financing the Tata-owned airline's Airbus and Boeing spree. They are the out-riders to the planemakers and engine firms that take the headlines, standing ready to buy jets from the airline the moment they are delivered and rent them back - a potentially profitable deal for both sides if conditions work. "The large majority of these aircraft are likely to be financed through sale-and-leasebacks with perhaps 20% of the financing come from the (Western) export credit agencies," said aviation adviser Bertrand Grabowski. Air India had no immediate comment. For airlines, sale-and-leasebacks have been a popular way to generate liquidity and ease balance sheets. Airlines with credible proposals can negotiate bargain prices for the eye-watering numbers of planes needed to keep up with GDP and rising incomes in some emerging economies. They then aim to sell them at a profit to lessors at the expense of agreeing to pay a rent. Because of the bulk discounts available to the airline, the idea is the lessor can afford to pay a fair price and still leave the airline a profit. "It's a cheap and often tax-efficient way for the airline to raise finance," said an aircraft finance source. "Many airlines would rather pocket $5m or so now and pay maybe $25,000 a month more in rent."<br/>