By Doug Cameron 

Avolon Holdings Ltd. on Monday launched a planned initial public offering which values the Irish aircraft-leasing company at about $1.8 billion, in a test of investor appetite for stocks with exposure to declining oil prices.

The private-equity-controlled company priced its offer of 13.6 million shares at $21 to $23 a share ahead of a planned New York Stock Exchange listing under the ticker AVOL, according to a regulatory filing. An enterprise value of more than $6 billion would place Avolon among the top five publicly traded aircraft-leasing companies.

A 20% fall in the average global price of jet fuel over the past year has fueled a surge in shares of airlines and stirred worries over a potential bubble in new aircraft orders if carriers defer some of the record backlog of new fuel-efficient jets due to the fuel-price drop.

Avolon is proceeding with its IPO following the collapse of takeover talks with a number of potential buyers in Asia, including China's Avic Capital Co. The talks ended after failing to reach agreement on terms and closing conditions, echoing the abortive takeover last year by a Chinese consortium of Avolon's larger rival, International Lease Finance Corp.

Airbus Group NV and Boeing Co. both have record order backlogs, and have played down the impact of falling fuel prices. The jet makers and leasing companies maintain that airlines decide to buy new jets because of potential fuel and other efficiency savings garnered over many years, and don't react to short-term changes in oil prices. Executives have said requests for order cancellations and deferrals are running below their historical average.

However, investors have pulled back from some lessors in recent months, while airline stocks have soared. AerCap Holdings NV, the world's largest jet lessor which bought control of ILFC, is up 15.5% this year, but has lost 6.6% over the past three months. Air Lease Corp., the second-largest listed lessor, has climbed 22.4% in 2014. Like rival Aircastle Ltd. Air Lease has outperformed the S&P 500 this year and over the past quarter.

Avolon owns a fleet of 122 mainly narrowbody aircraft with a book value of $5.3 billion and manages 12 more for other investors leased to 48 airlines. It has a $6.6 billion order book for 74 jets that includes Boeing 787s, and it plans to buy A330neos from Airbus Group NV.

Avolon was launched in May 2011 with private-equity backing by a group of former Royal Bank of Scotland PLC executives. Its largest shareholders are Cinven Partners LLP, CVC Capital Partners, Oak Hill Capital Partners and an affiliate of the Government of Singapore Investment Corp.

Write to Doug Cameron at doug.cameron@wsj.com

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