Sumitomo Corporation (President and CEO: Susumu Kato; hereinafter, "Sumitomo") successfully concluded an operating-lease contract with Japan Airlines Corporation for one Boeing 737-800 aircraft with a 165-seat capacity. The aircraft has recently been delivered safely and is currently serving Japan Airlines' domestic routes. The period of the lease is 12 years.

・ Background:
Sumitomo reorganized its organizational structure as of April 1 this year to set up a new department within the Financial Service Division, the Leasing Business Department, to handle various leasing business activities of Sumitomo. Aircraft leasing business line has been transferred to the Financial Service Division and will form the core business of the new department.

Sumitomo currently manages approximately 60 aircraft, including some 20  airplanes owned by itself, mainly via Sumisho Aircraft Asset Management B.V., a Netherlands-based group company specialized in the aircraft leasing. This deal is the first aircraft lease concluded between Sumitomo and Japan Airlines. (Sumitomo also owns an Airbus A320 aircraft on lease to  All Nippon Airways Co., Ltd. delivered last year.)

 

・ Future Approach:
Many European and US financial institutions and investment funds have been ailing from the subprime loan crisis since last year and are selling down aircraft leasing assets to secure liquidity. In addition, airlines are suffering from the rising costs due to soaring fuel prices. Now uncertainty is spreading over the entire airline industry and the industry is expected to remain stagnant for the near future.

 

Sumitomo takes this situation as a favorable opportunity to increase its aircraft leasing assets, and plans to boost the number of company-owned aircraft to approximately 70 to 100 over the next three to four years while carefully selecting an appropriate aircraft model and scrutinizing future demands. Due to the change in the leasing accounting rules effective from April this year, Sumitomo is expecting  more deals with airlines who are trying to slim down their balance sheets.

 

Related Link

・　Financial & Logistics Business Unit

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