South Korea’s private equity and venture capital manager IMM Investment Corp. has launched an aircraft leasing business as the company sees it lucrative thanks to the increasing number of budget airlines across the world and outbound travelers.

According to the investment banking industry on Tuesday, IMM Investment has recently established an aircraft leasing firm Crianza Aviation by partnering with overseas merger and acquisition agents and companies specializing in airplane leasing business.

Crianza Aviation already bought seven airplanes last week including mid- to large-sized Boeing B777 and Airbus A330. Singapore Airlines and Qatar Airways signed a deal to operate the airplanes for the next decade or so. Crianza Aviation plans to start raising funds next year to add more aircraft assets. It aims to have more than 20 jets by 2020 by buying popular models at low costs and leasing them to global air carriers whose credit rating meets the threshold. The company will also introduce various financial investment instruments to institutional investors at home and abroad based on its airplanes as underlying assets.

There are two types of aircraft leasing - finance lease and operating lease. Under a finance lease, the owner of an aircraft asset is a lessee - air carrier, but under an operating lease, the ownership of the asset remains with the lessor. The country’s largest flag carrier Korean Air Lines Co. more relies on finance leases but its rival Asiana Airlines Inc. and low-cost carriers employ more operating leases.

IMM Investment ventured into the operating lease business betting on its high growth potential. Air carriers around the world have been increasing operating leases to reduce a financial burden to buy aircraft and avoid a risk of losses in asset value. Moreover, outbound trips are increasing in emerging countries including populous China and India. The number of airline passengers in Korea exceeded 100 million this year, 68 years after the country’s first passenger aircraft had taken off in 1948.

By Song Gwang-sup

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]