Pontifications: Nordic quietly rises to #4 world lessor

By Scott Hamilton

Dec. 10, 2018, © Leeham News: In the world of commercial aviation, GECAS, Avolon, AerCap, Air Lease Corp and BOC Aviation are among the most recognizable names of lessors.

These companies make headlines with large orders of Airbus and Boeing aircraft. Air Lease is headed by Steven Udvar-Hazy and John Plueger, giants of the aircraft leasing business.

But one lessor quietly, below the radar, has become one of the largest lessors in terms of aircraft count pursuing regional aircraft, a product mostly shunned by the biggest lessors.

Nordic Aviation Capital Embraer E190-E2. Source: Nordic.

Nordic Aviation Capital last year ranked tied for fifth with asset manager BBAM, each with 404 airplanes in their portfolios, according to an Airfinance Journal 2017 survey. GECAS, AerCap, Avolon and SMBC Aviation Capital were bigger.

DAE Capital of Dubai, BOC Aviation, Air Lease Corp and Aviation Capital Group rounded out the top 10.

More than 500 aircraft

Nordic currently has 457 aircraft owned and 11 under management, according to its website, which is slightly out of date. Airfinance Journal’s Fleet Tracker data base shows 502 aircraft; a company official says recent acquisitions from Air Canada and JetBlue boosted the portfolio to “more than” 500 airplanes.

According to the website, Nordic—which acquires used aircraft, undertakes purchase-and-leasebacks and has placed new orders—shows 154 ATR72s in the portfolio. The Embraer E190/195 accounts for 134. There are 90 Bombardier Q400s, 43 ATR42s, 26 E170/175s, 23 CRJ900/1000s, and seven Airbus A220s.

Airfinance Journal’s 2018 lessor rankings won’t be out for several months. But based on websites, Nordic will displace 2017’s #4 lessor, SMBC, which has 419 owned and managed airplanes. (When it comes to owned airplanes, SMBC only has 254 to Nordic’s 457.)

However, SMBC has orders for 246 aircraft, mostly Airbus A320neos and Boeing 737 MAXes.

Asset value

When it comes to asset valuations, Nordic ranked #15 in 2017 in Airfinance Journal’s listing. Given the vast differences in values between mainline single- and twin-aisle aircraft vs regional aircraft, this ranking isn’t surprising.

Nordic came in at $6.1bn in 2017. In Fiscal 2018, ended June 30, the asset valuation increased to $7.8bn, according to its annual report.

Mega-lessor AerCap, with 1,121 airplanes, ranked first at $35.1bn in valuation. GECAS, with more aircraft (1,271) than AerCap but with an older portfolio, ranked second at $28.3bn. Avolon was #3 in aircraft (572) and valuation ($21.3bn).

Nordic was founded in 1990. It’s been profitable for 22 consecutive years. Revenue in FY2018 was US$735.4m. Business Performance was $160.2m and net profit was $130.9m. “Business Performance” may be equated to non-GAAP financial results. In this case, Nordic is subject to IFRS accounting standards.

 

37 Comments on “Pontifications: Nordic quietly rises to #4 world lessor

  1. It took a little hunting, but apparently Nordic leases all 7 of its A220s to AirBaltic. AirBaltic has 14 A220s in its fleet. It’s got orders for another 36, for a total of 60 A220s. P.S. Scott, would you please have your website administrator look at my account. It’s gotten kind of “clunky” on my postings and has no edit function. Thanks in advance for any help you can offer on this.

    • Mine has as well. I suspect its my log in and post method.

      Ergo, it shows up latter and no edit, but I just inflict the readers with that part (more so than before)

      A bit like sending a letter to someone you like now knowing how they will respond!

    • Thanks, Scott, for your advice on clearing my browser cache. Maybe others will find this helpful.

      • Montana and TransWorld: The edit feature appears for me when I posted a comment.

        Are any other readers having issues?

        • Ditto. Disappeared for my last four or so posts over the last couple of months, except it was there on the post before this one a few days ago.

          • @Sam, @Claes, et al: Our IT is working on it. Thanks, everyone, for the alert and feedback.

  2. A330 MRTT,here’s an idea so obvious that everyone else has almost certainly thought of it already.
    The USAF should charter the Airtanker A330s currently being used by Thomas Cook. Try before you by and keep Boeing from getting too cosy.Retire a couple of KC 135, fill the gap waiting for the KC 46 and it would be no extra expense. Apparently they have quite a nice cabin which would be appreciated by American service personnel and their families. There’s nothing to lose.

    • Well the KC-135R are long paid for and we have lower costs crews as they are USAF or NG personnel.

      Its not like allies don’t have them and we get a chance to kick tanker tires as it were around the proverbial coffee (or tea) table (no booze allowed of course)

      Unless the boom is falling off (didn’t want to help myself there) it works as advertised so nothing new.

      Boeing could be building 767 tankers now (if anyone would buy them)

      US tends to need the boom as the USAF in their less than infinity wisdom uses that even for fighters that are better off with a drogue fueling system. Bombers and transports need the boom – but F-15, F-16 (F35A?) all use the boom.

      What we probably will never know is what it would have worked out if EADS has built a KC-46 spec tanker.

      At least at one time, I was informed (by a highly reliable source) their wiring separation did not even meet Boeing’s for commercial aircraft.

      As the KC-46 comes on line the KC-135 will be kept (and upgraded apparently) so it lives on belying the dire need for tankers ASAP – standard USAF refrain.

      The KD-13R in service are well taken care of, have CFM engines and some other upgrades. Likely they could use a glass cockpit mod – probably having to rob planes in the Smithsonian of their steam gauges to keep the instruments working!

      • I think the US Air Force is looking for a kC-10 replacement. Unlike the Kc-135 the kC-10 airframes are nearly done. US Air Force doesn’t like to move parcels around with C-17. So they used the kC-10 instead.

        For the first kC-X competition the US Air Force made it clear in publications that they want a logistic aircraft first – a freighter and troop mover – and then a tanker. Problem was it wasn’t mentioned in the RFP.

        The second competition was only about a tanker aircraft. An aircraft US Air Force has enough off but C-argo aircraft are demanded.

        The KC-135 will get very old because nobody really needs them.

        • KC10 airframes nearly done ? That’s ridiculous as they would barely be doing 600 hrs per year. That’s why military airframes last half a century…hardly used.

          • MH:

            Thank you for the good laugh. The USAF wanted a transport first, it just was not reflected int he
            RFP!

            In the US we call it big eyes. That is when you see something bigger and you covet it, not that you want or need it.

            The problem for the USAF is it is a big eye organization. They want faster, bigger despite that is not what is required.

            Lets keep in mind that they had the wonder of all aircraft (C-17) in full production they could have extended (acualy fought tooth and nail NOT to take the 220 program planned for) – of course there was a US song, forget the band, called “Whose Sorry Now?” C-17-1000 would have been a cool bird.

            So, the back story is that the USAF went to congress and told them they needed to replace the KC-135(Rs) as they were really old and falling apart.

            They then wrote an RFP to reflect that.

            Apparently (left hand right hand syndrome) when the Generals saw the KC-330, it was love at first sight (segue to Trump and Putin/Kim Il)

            Kind of like when I met my wife on sort of a blind date, wow. Now that make work in life, seeing as I did not have an RFP written.

            Sadly, unlike love, RFPs rule, sorry guys, you not only did not ask for that, you tried to credit where credits were NOT allowed.

            Congress gets a mite testy when you ask for one thing but then say you wanted something else. And all the justification we just throw out the window?

            Now I am the first to admit, when we get into Bjorn stability calculations I am left out, I don’t have the match background (and a bit too old to go for it)

            However, I can read pretty well, and I am looking at the aforementioned 600 hours a year, we see the KC-135R on a regular basis and they look WOW.

            Following that up they have a very good refurbishment program that looks at corrosion wear and tear and they are in rally good shape.

            Now the USAF is saying they will keep all the KC-135Rs (maybe congress will let them scrap the non Rs in storage) and the KC-46.

            KC-10? The issue is its being dropped by everyone, so there is no background support for it. FedEx had a variation that they put glass cockpit in and then dumped them. Its seems less viable.

            KC-135 is not operated by more than a handful, but the USAF has 350+ and some odds and sods around the world as well in other AF.

            And now we hear about stealth tankers.

            So where it all goes, hard telling. Maybe buy the 179, then get a small fleet of the A330-MRT to replace the DC-10 while working on future tanker.

            Of course the down graded F-35 with its less than good range does not help things.

          • Fedex has 34 DC10s , plus 57 of the essentially similar MD11. Doesnt appear to be dropped !

            Their oldest working DC10 first flew for Hawaiian in 1978. So its age that means the ’10’ is slowly being replaced by new build 767s and 777s
            The oldest USAF KC10 was delivered in 1988 and their mooted retirement was premature, the previous plans were driven by sequestration.
            https://leehamnews.com/2013/09/16/usaf-considers-scrapping-kc-10-in-sequester/
            Considering both Fedex/USAF/ others fleets there seems to be another 10+ years left for them.
            In reality , avionics is the weak spot but thats contracted for
            https://www.aviationtoday.com/2017/11/02/usaf-wants-keep-rockwell-collins-around-kc-10-work/

            C-17s production run was extended by Congress. A 2002 order for 60 more was to help Boeing after 911. Gates had said no more after 205 , but congress paid for another 17. Replacements meant the USAF took delivery of 224 in total

          • @Transworld

            There may be a difference between needs and RFP or people managing an air fleet and people making up an RFP for some reason.

            The C-17 is not a good logistical aircraft for moving troops and parcels around; far to expensive and a gas guzzler. A KC-10, KC-46 or KC-30A can do much better.

            Where on earth can you get spare parts for a C-17 or a DC10, 767 or A330? Most A330MRTT operator countries have a civil airline operating A330: Qantas, Korean Air, Singapore Airlines, Saudi, …

            C-17 is OK for outsized cargo.

    • The UK tankers being put out to charter are useless as far as USAF goes. None of them have the optional booms and are pod only. That’s what makes the charter work as the pods are removable.

      • I had thought of that.The RAF could do with a couple of boom equipped MRTT for its P8s and rivetjoints,a deal could be done.

      • Tornado GR4 had an attachment that could be put on the refuelling probe that made it compatible with USAF tankers (and incompatible with UK ones). I don’t know if there’s an attachment that would work the other way round.

        • No, you need a boom,but the design exists after the normal years of development pain.
          I think there’s an automatic version aswell,I’m sure the USAF would like to compare it with the KC46 version.

          • Hmmm, odd about the GR4. Not sure why you would do that.

            The boom can have a drogue on it, new one I think is fixed, the KC-135 has to be put on on the ground.

          • GR4 didn’t have a boom attachment. It was the other way round, the boom had a trailing attachment to suit the probe receivers. It’s been around long before the GR4 came along

    • They are not built per USAF spec, hence in peacetime they can be used, but as the situation requires full USAF spec they will not be allowed into that combat defined area. Just look at Japan discovering the differences between their “civil” KC-767 and the “USAF spec” KC-46A’s they are now buying. Not all Boeing executives understood the difference either initially I think (looks the same, smells the same, must be the same…)

      • None of you seem to grasping the point of this exercise.The DOD dosnt actually need to buy A330s,just make Boeing think that they might.Its basically free or at least very cheap and they don’t need to be deployed in a combat scenario,any technical deficiencies can be dealt with before actually buying,having gained a full understanding of the potential problems.

        • Boeing has a contract for producing the KC-46A’s, if the USAF leases some A330 MRTT’s certified to fill up US fighters and bombers in friendly skies does not effect Boeing production much.
          The difference would be if Boeing got paid per hr of tanker operation and gallons transferred per month, then any leased in capacity will effect invoicing directly.
          It can effect the Boeing aftermarket business but 2-3 leased in A3300MRTT’s would not make much of a dent as hundreds of KC-46’s will eventually be delivered (unless the B-52’s are reengined and reduces air refuelling requirements).

          • Hundreds will still be delivered.

            As the KC-135R soldier on (in the less lethal combat environments) and there are 350+ in US inventory alone………………

            Lots of room to play in the space and fueling needs all over.

            That is why they have such low hours. If you need to file off the Lankan West coast, a tanker in North Carolina does you no good (yea I know that is obvious)

            The A330MRT claim to fame was cargo, but if its carrying cargo it can’t fuel anyone either.

            The US has tankers scattered all over the world to fuel those planes that need it, and have to have it or they can’t do their missions, even though its hit and miss as to how long a tanker flys.

            So, maybe 20% of your fleet could do both with scheduling. But then why not use cargo planes?

            The US has around 220 C-17s, something around 80 C5 converted to modern cockpit and engines (still not doing great mission % wise)

            And the CRF that is actually used more than the minimum requirement (which makes more sense, they are a lot cheaper!)

          • “The A330MRT claim to fame was cargo, but if its carrying cargo it can’t fuel anyone either.”

            Not so. The new widebody refuelers, like the KC10 before them, could refuel and carry supplies for say a a flight of fighters deploying overseas. Sure it wouldnt have max fuel or max cargo but that wouldnt be necessary just crossing the Atlantic.
            I understand that sort of mixed load mission was built into the specs for the KC46 and easy to achieve in a widebody
            ” So in addition to its fuel load, the plane can transport up to 18 pallets of military supplies; or it can carry up to 54 patients with on-board medical support; or it can host up to 114 troops for overseas contingencies.”
            https://www.forbes.com/sites/lorenthompson/2018/04/13/how-boeings-kc-46-next-gen-tanker-will-set-the-global-standard-for-aerial-refueling/
            Fuel is carried in wings and hold tanks, still leaves space on main cargo deck for pallets or a limited passenger load.

  3. Was wondering if a a lease company ever was the ” major launch customer” for an aircraft type.

    See more and more interest in the A321LR, the XLR looks like having good potential but to some extent its a niche market. There could be many airliner interested but they don’t want them in big numbers, say 5-10 of the type.

    A leasing company could maybe decide to order say 50+ or so of the type to serve this market?

    • @Anton: Lessors are often “a” launch customer but not “the” launch customer.

      • Thanks Scott, apologies for late reply but didn’t have comm’s for a couple of days.

  4. As mentioned back ten postings or so, the C-17. It was once touted as a possible tanker. The plane was built to military standards, it is fairly new and has legs. Other cargo planes (C130s) are used for refueling. Maybe they missed the boat on that one. Four engines, but the economies of scale would apply when you think of all the C-17s that will be around for 50 years…

    • KC-130 has drogues but no boom. So its limited and no use to the USAF who in their foolishness does not sue that fueling method for fighters.

      While a KC-130 can fuel a jet, its not the best, its the only one that can do a helicopter.
      note: A KC-130 fueling Marine F/A-18s crashed this last week, loss of 6 lives and 150 million in aircraft.

      C-17 will be around a long time for sure, but if its fueling it can’t haul cargo either.

      Small Air Forces it works for, bit one, not so much.

  5. Norwigen Boeing 737/800 stuck in Iran with turbine oil leak and no chance of getting a Boeing parts or certified engineer to fix it .

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