FLY Fly Leasing Limited

Babcock & Brown Air Ltd. (FLY) will look at acquiring "chunks" of aircraft leasing portfolios after announcing plans Friday to take a stake in the company that manages its fleet.

The Dublin-based company, known as B&B Air, is taking a 15% stake in the privately-owned firm that runs its fleet of 62 commercial aircraft as part of a management buyout of the business, which had long been seen as a takeover candidate.

The fleet-management company, to be renamed BBAM LP, will also raise its stake in B&B Air to 9.9% from 6.6%.

NYSE-listed B&B Air is led by Chief Executive Colm Barrington, an industry veteran who is also non-executive chairman of Ryanair Holdings PLC (RYA.DB, RYAAY), the discount airline.

The twin moves end uncertainty over the future of the fleet-management business, which also oversees another 230 aircraft on behalf of investors.

It is being acquired from Babcock & Brown Group, the bankrupt Australian finance and advisory company, but had long been seen as a target of Japan's Nomura Co. Ltd., according to people familiar with the situation.

The aircraft leasing market has been in a state of flux as the financial parents of some of the largest operators--including American International Group Inc. (AIG), CIT Group Inc. (CIT) and Royal Bank of Scotland Group PLC (RBS.LN)--considered selling their operations.

The aircraft-management firm is headed by B&B Air Chairman Steve Zissis. His team is taking an 85% stake in BBAM LP and paying an average of $8.78 a share to boost their holding in the NYSE-listed B&B Air. Its shares closed Thursday at $10.35, having listed in September 2007 at $23.

B&B Air spokesman Matt Dalton said the company was a potential acquirer of aircraft. "We would not be opposed [to buying] chunks of portfolios," he said.

-By Doug Cameron, Dow Jones Newswires; 312-750-4135; doug.cameron@dowjones.com

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