Macquarie is placing a $5 billion bet on passenger jets

The deal includes a large number of Boeing 737s

Macquarie Group has announced a huge expansion of its aircraft leasing business, buying a portfolio of 90 jets in a deal worth more than $5 billion.

The seller is international leasing company AWAS, which leases jets to airlines all over the world, with customers ranging from Thai Airways to Jetstar Pacific and AeroMexico.

What’s Macquarie doing hiring jets? The Australian investment bank already has an aircraft leasing business in Macquarie AirFinance, which holds $29 billion in assets including 130 planes for hire.

By value, 90% of the new acquisitions are Airbus A-320s and Boeing 737s, two of the world’s most popular aircraft used for short trips and capable of 30-minute turnaround times on the ground.

Macquarie went into a trading halt this morning and will be back on the market tomorrow. It also announced an institutional share placement of $500 million. The purchase price is $US4 billion, or around $A5.1 billion at current exchange rates.

The 90 jets in the deal, expected to take a year to finalise, are currently leased to 40 airlines.

Here’s how Macquarie, in an investor presentation, says the deal will affect its existing aircraft for hire. It shows it will increase the average remaining lease terms on its jets and more than double the value of the portfolio.

Macquarie says the net profit (after tax) from the deal, when complete, is expected to be an additional $115 million a year.

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