New Industry Development & Cross-function Business Unit - Business Overview
As for the technical aspect of its efforts, SC worked to develop within the company the same level of expertise and know-how that maintenance divisions of aviation companies possess.
Day-to-day routine servicing and maintenance is essential for safe aircraft operation. In addition, the full attention of professional aircraft engineers is indispensable in aircraft and engine overhauls, which are practiced every five years. Without good technical capabilities, aircraft conditions could not be assessed accurately, and thus the decline in the value of particular aircrafts could be overlooked. As a matter of fact, history has witnessed not a few companies having to withdraw from leasing businesses due to a lack of technical capabilities needed to maintain the value of aircraft assets, despite that they were well-funded giant organizations.
SC sends its aircraft leasing staff to airlines' hangars to attend actual servicing and overhaul work, where they themselves make checks together with airline engineers. SC staff contribute to best quality maintenance by making good points and requests, thereby building and maintaining value and trust in the Sumitomo brand, which has gained a reputation for the high reliability of its aircraft.
In December 2008, SC and SMFL founded a joint venture company named SMFL Aircraft Capital Corporation B.V. (SMAC). SC Group's aircraft leasing business is now led by SMAC, which utilizes SAAM's expertise in aircraft leasing and SMFL's ample financial resources.
Currently, circumstances surrounding the airline industry are severe, with major oil price fluctuations and concerns for the declining number of passengers stemming from the slowdown of the world economy. This situation, however, provides a favorable environment for aircraft leasing businesses due to increasing demand from airlines which seek to secure aircraft in a flexible manner. In addition, falling aircraft prices due to the shrinking market is creating prodigious opportunities to increase the number of aircraft owned. SC plans to take these opportunities to purchase 70 new aircraft over the next couple of years, thereby expanding its fleet size to a total 130, including some 20 and 40 currently owned and managed on a contract basis, respectively
Amid the anticipation that the airline industry's boom-and-bust cycle will likely repeat relatively quickly, aircraft leasing business is expected to grow steadily in the medium to long term. SC will wholeheartedly pursue this opportunity to be ranked among the industry's Top 10 companies in the shortest possible time. In line with this vision, SC will continue to work proactively to gain more worldwide recognition for the Group's aircraft leasing business.
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January 2010
