Dubai Aerospace Enterprise (DAE), a prominent global company providing aviation services and leasing solutions, has recently entered into an agreement to procure a total of 64 Boeing 737 MAX aircraft.

This significant development was made public on August 14th, 2023. DAE revealed that one of its affiliated entities had finalized a binding arrangement to secure the rights, stakes, and responsibilities associated with a selection of 64 Boeing 737 MAX airplanes. These aircraft were previously owned by a wholly-owned subsidiary of China Aircraft Leasing Group Holdings Limited (CALC).

The acquired portfolio encompasses various models, including the 737 MAX 8s, 737 MAX 9s, and 737 MAX 10 aircraft. It's worth noting that the certification process for the 737 MAX 10 is still pending.

Photo: DAE

The scheduled aircraft delivery is set to take place between 2023 and 2026. However, the precise details of the transaction's terms were not revealed.

Both DAE and CALC are happy with the deal

DAE hasn't had the easiest time in recent months, being required to write down almost $600 million worth of jets that were leased to Russian airlines. Nevertheless, its eyes are firmly on the future, and these new aircraft acquisitions are seen as key to developing a robust fleet ready for leasing. DAE reached the milestone of 500 aircraft owned, managed, committed, and mandated-to-manage. These include Airbus, ATR and Boeing, and make for a fleet size of more than $16 billion.

Reflecting on today's announcement, DAE's CEO, Firoz Tarapore, said,

"Since inception and including this transaction, DAE has acquired and is committed to acquire approximately 500 Boeing aircraft. We look forward to further growing this relationship in the coming years. Approximately 20% of the acquired portfolio is on lease to airline clients who are also existing clients of DAE, and we look forward to expanding our relationship with them. The remainder of the acquired portfolio of assets will be placed directly by DAE in the coming quarters."

CALC also verified the agreement through its own official statement, highlighting that the company had engaged in a "Novation Agreement" with DAE. As of December 31st, 2022, CALC had a total of 27 Boeing aircraft within its owned and managed fleet.

Photo: pjs2005 via Wikimedia Commons

Earlier in 2023, CALC successfully accomplished its inaugural 737-800 cargo conversion project. Furthermore, in June 2023, the company received its initial Boeing 737 MAX 8 delivery from Boeing.

In a pro forma analysis, the described transaction is poised to boost the share of modern, fuel-efficient aircraft within the owned fleet to approximately 66%, marking a significant rise from the current 50%. This development serves to enhance the predictability of the growth trajectory. The deal will enlarge the collective fleet, including owned, managed, committed, and those under management mandate, to approximately 550 aircraft. The overall valuation of this expanded fleet is estimated to be around US$20 billion, as detailed by Tarapore.