By Doug Cameron
Of DOW JONES NEWSWIRES
CHICAGO -(Dow Jones)- The head of AerCap, the aircraft leasing company, said Friday he expects airlines to start adding capacity again next year amid "positive" demand for its planes in 2010 and 2011.
Klaus Heinemann, chief executive of parent AerCap Holdings NV (AER), also said it could take delivery slots direct from manufacturers or "distressed" clients next year, when it plans to spend EUR2.5 billion on aviation assets.
"There are a few interesting situations emerging," said Chief Executive Klaus Heinemann on a call with analysts.
AerCap has a large engine and spares leasing business alongside its core aircraft unit, and Heinemann said he expected "significant" demand for spares as airlines bring back aircraft grounded during the downturn ahead of the Northern Hemisphere summer season.
Netherlands-based AerCap is one of the world's largest aircraft lessors and is merging with listed rival Genesis Lease Ltd (GLS).
Tight credit markets have ranked alongside weak passenger and freight traffic in pushing airlines and other lessors to cancel or defer aircraft deliveries.
AerCap said Friday it had secured $358 million from China Development Bank to fund Airbus A330 deliveries, including $96 million in hard-to-find pre-delivery deposits.
Chinese banks are becoming increasingly active in aircraft finance, helping alongside the expansion of Middle East backers to fill part of the gap left by the exit from the sector of many traditional financiers.
Heinemann said the Chinese funding would replace some backing originally slated to come from European export credit agencies which, together with the U.S. Export-Import Bank, have become a key source for the industry during the recession.
His comments came as AerCap beat market expectations with a third-quarter profit of $35.5 million, or 42 cents a share. This compares with $51.3 million, or 60 cents per share, a year earlier. The core leasing business saw net spread, a key measure of lease rental income after interest expense, grow 23%.
Airlines have increasingly turned to renting aircraft as weak finances left them unable to purchase equipment, but Heinemann said the pressure from carriers to cut rates was "benign".
AerCap shares were recently down 3.2% at $8.62. The stock has almost tripled since the start of the year.
-By Doug Cameron, Dow Jones Newswires; 312-750-4135; doug.cameron@dowjones.com
(Joan E. Solsman contributed to this article)