Air Lease, an aircraft leasing firm established by renowned industry figure Steven Udvar-Házy, has reached an agreement to be acquired by a consortium of investors for $7.4 billion, marking a significant step towards further consolidation in the aircraft leasing sector.
The acquisition, announced on Tuesday, involves Japan’s Sumitomo, SMBC Aviation Capital, as well as asset managers Apollo and Brookfield. Under the terms of the deal, shareholders of the Los Angeles-based Air Lease will receive $65 per share, reflecting an approximate 8% premium over Friday’s closing price. The comprehensive valuation, which includes debt, brings the total to around $28.2 billion.
Industry Context
Aircraft lessors play a crucial role in the aviation marketplace by renting out planes to airlines, enabling them to preserve cash that would otherwise be spent on purchasing aircraft, which can exceed $100 million in list price. Recent years have seen a shortage of aircraft due to the Covid pandemic, supply chain disruptions, and other factors, which has resulted in rental rates reaching historical highs for both new and older aircraft.
The aircraft leasing industry owns more than half of the global fleet of passenger jets, increasing its market share from 51% in 2009 to 58% today, according to IBA Group, a leading aviation consultancy. However, growth has plateaued as many larger airlines have returned to profitability, enabling them to buy more planes. As IBA’s chief economist Stuart Hatcher notes, “Cash is not alien to these guys anymore.”
Challenges in the Airline Sector
Concurrently, airlines are reassessing their capacity strategies due to an oversupply of flights, which has adversely impacted ticket prices and profits this year. Notably, Spirit Airlines recently filed for Chapter 11 bankruptcy protection for the second time in less than a year, failing to implement the necessary changes after its previous filing, leading to elevated costs and decreased demand.
The move to take Air Lease private signifies a trend of consolidation within the industry, aimed at enhancing operational scale. As of the end of the second quarter, Air Lease maintained a fleet of 495 owned aircraft.
With its backlog, Air Lease ranks as the fifth-largest aircraft lessor in the world, according to IBA data. The parties involved anticipate the transaction will be finalized in the first half of 2026, with the newly formed company set to be headquartered in Dublin.
“It makes perfect sense when you consider it’s … the cheapest way to buy market growth,” said Hatcher.
