Jetrader - November/December 2012 - 6

Q&A

Peter Barrett

Jetrader: Tell us about the reasoning behind this deal and what made this transaction mutually beneﬁcial to both companies. Peter Barrett: The previous owner wanted to sell the business and recognized that, as one of the leading aircraft leasing businesses in the world, it was a valuable asset to sell. The motivation for our new shareholders was that they had some previous experience in the aircraft ﬁnancing industry space through both SMFL Aircraft Capital Corporation and Sumisho Aircraft Asset Management, and wanted to expand in that area. In our company they saw a business that has been very successful on a large scale, and is a leading player in this market. We are both global businesses with global perspectives, and SMBC shares our vision of achieving substantial future growth. In addition, I suppose we made a good match because our company was previously owned by another large bank, so a lot of areas regarding regulation and systems, as well as our overall mind-set, ﬁt well into a ﬁnancial institution. JT: At $7.3 billion, this is the biggest trade in leasing history by a factor of nearly three times. What do you think the impact of this trade will be among the aviation community?

Chief Executive Officer SMBC Aviation Capital

SMBC Aviation Capital was founded in June 2012 after Sumitomo Mitsui Banking Corporation acquired RBS Aviation Capital for $7.3 billion. The trade is a landmark deal for the aviation leasing community and sets a high benchmark for the future of the industry. Jetrader spoke with SMBC Aviation Capital Chief Executive Ofﬁcer Peter Barrett about his take on the deal, ﬂeet strategies and the increasing role of Japanese companies in the leasing community.

PB: Overall the trade is a very positive development for the aviation community, and I think it will become the benchmark for big deals in this space in the future.. Ours is a business that was set up 11 years ago, grew substantially and proﬁtably, and was then traded successfully by the owner. Our new shareholders haven’t just bought a bunch of aircraft, they’ve bought an established business with a coherent strategy, a great ﬂeet, an experienced team, a strong franchise and an outstanding customer base. That sends a very positive message to the aviation community, and there are a lot of lessons for our industry in terms of how successfully this trade was executed. JT: Tell us about Japan’s increasing role in aircraft leasing and aviation in general and how SMBC has positioned itself to be successful in this arena. PB: Japan’s role in the aircraft leasing business goes back a very long way. What we are seeing today is a reemergence of what has been a long involvement by Japanese banks, Japanese leasing companies and Japanese industry in aviation and aircraft leasing. When I started in this business 23 years ago, Japanese banks and leasing companies were big players across the leasing industry. They’ve always continued to have a signiﬁcant role, and obviously the Japanese investor market

and the strong banking markets are an important part of this. Japanese ﬁnancial institutions are seeing the compelling long term opportunity that this industry presents, and are using their ﬁnancial strength and their sector experience to get even more involved in the space. The fact that we are now part of a large ﬁnancial group that is not just a leasing business but a bank, a trading company and a signiﬁcant player in the Japanese investor market means that we are now very well positioned. In my view, there’s not really any other player in the market that has the same spectrum of products and the same quality of relationships that we now have. JT: 94% of the SMBC ﬂeet is comprised of Airbus A320 and Boeing 737 Next Generation family aircraft with an average age of just 4.5 years, making it one of the most modern and fuel efﬁcient in the world. Do you plan to continue this strategy moving forward or are there other types of aircraft that you’d like to introduce as major players in your ﬂeet? PB: Our ﬂ eet strategy is to have a young, modern, popular aircraft ﬂeet that is broad-based enough to be used across the world. Today, the A320 and the 737 ﬁt that strategy very well and I believe will continue to do so for many years to come.

6 The ofﬁcial publication of the International Society of Transport Aircraft Trading

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Jetrader - November/December 2012

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