A group led by Sumitomo Corp. agreed to buy Air Lease Corp., the aviation finance company founded by industry pioneer Steven Udvar-Hazy, for $7.4 billion, further consolidating a sector that is becoming more and more significant in aircraft sales.
The purchasers, which comprise leasing company SMBC Aviation Capital, Apollo Global Management Inc., and Brookfield Asset Management, will pay investors $65 per share in cash for the Los Angeles-based Air Lease, the company announced Tuesday. The purchase price is 8% more than the previous closing price for Air Lease.
The agreement will solidify SMBC Aviation's position as the world's second-largest aircraft lessor, after AerCap Holdings NV, and is expected to close in the first half of 2026. While SMBC owns and operates jets valued at $33 billion, Air Lease is in charge of a fleet of aircraft valued at roughly $29 billion. According to a report released Tuesday by Jennifer Panger, an analyst at S&P Global Ratings, the two businesses would have roughly 489 aircraft on order when combined.
Over the years, the aircraft leasing industry has experienced an increase in consolidation, driven by purchasers like Saudis and Japanese who have substantial financial resources. Since the epidemic, aircraft lessors have gained market share as airlines seek to finance plane purchases without jeopardizing their own bank sheets.
As of 2:32 p.m. in New York, Air Lease had increased 6.6% to $64.18, the largest intraday gain since May 6. The stock had increased by almost 25% this year before today. With a 5.4% stake, Udvar-Hazy, who left as executive chairman in May, is still the company's largest individual stakeholder.
In 2022, SMBC Aviation Capital, controlled by Sumitomo Corp. and Sumitomo Mitsui Financial Group, agreed to pay $6.7 billion to acquire smaller competitor Goshawk Aviation. By purchasing General Electric Co.'s aircraft leasing division in 2021, AerCap cemented its dominant position in the market and placed a wager that the aviation sector would recover from the pandemic.
In 2023, Apollo and AviLease, a jet lessor owned by Saudi Arabia's sovereign wealth fund, reached an agreement to purchase Standard Chartered Plc's aviation financing division.
After a government bailout during the 2008 financial crisis, Royal Bank of Scotland sold its aviation leasing division for roughly $7.3 billion in 2012, marking the largest disposal by the company at the time. This gave Sumitomo Mitsui Financial a significant boost in the leasing market.
According to the firms, Air Lease will change its name to Sumisho Air Lease and transfer its order book to SMBC Aviation. The deal is estimated to be worth $28.2 billion, including assumed or refinanced debt. Capital will come from funds run by Apollo and Brookfield. Under certain circumstances, the US lessor may be subject to a $225 million termination charge if the deal falls through, and the buyers may be required to pay $350 million if regulators reject the transaction.
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