ST Engineering and Temasek to launch narrow-body freighter aircraft leasing JV in Singapore

Romain Guillot
le 18/05/2021 , Maintenance aéronautique, Aviation civile
Singapore Technologies Engineering (ST Engineering) and Singapore investment fund Temasek announce their intention to create a 50-50 joint venture dedicated to the leasing of cargo aircraft in order to meet the growing demand of the global market.

The new JV has set itself the goal of owning a portfolio of second-hand passenger aircraft worth $ 600 million within five years, aircraft that will be converted into full-freighter aircraft to meet the strong market demand, particularly through the e-commerce growth.

This portfolio will also consist of narrow-body aircraft, offering operators the ability to reuse older passenger aircraft and breathe new life into them as cargo aircraft. As a reminder, ST Engineering is an Airbus partner via German joint venture Elbe Flugzeugwerke (EFW), in particular for the A321P2F conversion program.

The A321ceo passenger to freighter program has also been enjoying growing success in recent months and EFW is developing its P2F conversion capacities around the world through ST Engineering. After Singapore (Seletar) and Guangzhou (China), ST Engineering is now creating a new conversion line in the United States which should be operational by the end of the year.

"This joint venture represents a significant step by ST Engineering in growing our aviation leasing business as we expand beyond passenger aircraft and engines to include freighter aircraft assets as part of our portfolio," said Jeffrey Lam, President/Head of Commercial Aerospace, ST Engineering. "As we embark on this exciting venture with our partner, Temasek, we also welcome and look forward to working with other potential like-minded partners who are looking to invest in the strong freighter aircraft leasing market. In the medium to long-term, the JV intends to securitise the leasing income streams by way of a business trust to unlock capital."

ST Engineering and Temasek thus intend to take advantage of the depreciation of the residual value of aircraft and their greater availability with the crisis linked to the pandemic to build up a fleet. The new joint venture will fund its portfolio "through a mix of equity and debt."

In addition, ST Engineering will provide the maintenance, repair and overhaul services associated with this fleet of aircraft and will be the manager of the assets and leases of the joint venture. Finally, the environmental aspect is not forgotten and the new joint venture also intends to work with its customers to help them reduce their carbon footprint through the use of sustainable aviation fuels and through improved engines maintenance programs.

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