Date: Fri, 19 Dec 1997 17:01:11 GMT Server: Apache/1.0.0 Content-type: text/html
Willis Lease Finance Corporation (formerly known as The Willis Group) is a leading provider of operating leases for spare commercial aircraft engines worldwide. The company acquires the engines in the aftermarket and leases them to foreign and domestic airlines, manufacturers and overhaul/repair facilities. The company also purchases and resells used and refurbished commercial aircraft engines, as well as airframe and engine components.
Willis Lease Finance Corporation serves a diversified base of customers worldwide. The company focuses on popular commercial jet aircraft engines, particularly noise-compliant Stage III engines, which are used on the Boeing 747,757,767,737-300/400/500, McDonnell-Douglas MD-80 Series, DC 10-31, MD-11 and Airbus A-300 and A-320.
Concentrating on this market, Willis Lease Finance Corporation services a niche sometimes ignored by the major commercial aircraft lessors. This focus takes advantage of the backgrounds and expertise of the members of the executive team, who have extensive experience in the airline engine industry.
Willis Lease Finance Corporation conducts business worldwide and has made agreements in over 60 countries, representing financial institutions, governments and companies involved in fleet modernization or restructuring. The company has been instrumental in the sales, leasing, financing, and/or purchase of $300 million worth of commercial transport type engines and aircraft.
Shareholder's Update offers general information about the company for those interested in investment opportunities. For more details, please contact Elliot M. Fischer, Chief Financial Officer of Willis Lease Finance Corporation.
You may also check the current status of our stock (WLFC) at NASDAQ Latest Quotes.
Willis Lease Finance Corporation is a leading provider of operating leases of spare commercial aircraft engines worldwide. The company is primarily engaged in acquiring commercial aircraft spare engines in the aftermarket and providing operating leases of such engines to foreign and domestic airlines, manufacturers and overhaul/repair facilities.
As of December 31, 1996, the company had 32 engines and related equipment owned and/or leased to 23 customers in 11 countries. Under operating leases, the company retains the potential benefits and assumes the risk of the residual value of the engine, as distinct from finance leases where the full cost of the engine is recovered over the term of the lease. Operating leases allow airlines greater fleet and financial flexibility due to their shorter term nature and relatively small initial capital outlay to obtain use of the aircraft engine.
The company also engages in the purchase and resale of used and refurbished commercial aircraft engines and airframe and engine components. Integration of the company’s leasing operations and these businesses is beneficial in maximizing residual values for its engines on operating lease.
Commercial airlines typically maintain a number of spare aircraft engines to ensure that their aircraft are not grounded when engines are removed for normal maintenance or as a result of engine failure. Industry analysts estimate that the worldwide fleet of approximately 11,000 commercial aircraft utilizes approximately 30,000 engines, including approximately 5,000 spare engines valued at over $11 billion. Ron Woodard, President of Boeing Commercial Airplane Group estimates 15,900 new aircraft will be delivered over the next 20 years, resulting in a projected worldwide fleet of approximately 23,000 aircraft in 2015, net of 3,900 retired aircraft. These 15,900 new deliveries, which represent a mixture of two-,three- and four-engine aircraft, will require approximately 39,000 installed engines. Assuming a ratio of approximately 17% spare engines to installed engines, the company estimates that these deliveries represent a potential market of approximately 6,600 additional spare engines over the next 20 years.
Airlines have increasingly turned to operating leases as an alternative to traditional financing of their aircraft, engines and spare parts. According to the 1996 Boeing Report, the fleets of operating lessors have grown from just over 200 aircraft in 1986 to over 1,000 in 1995, representing approximately 10% of total commercial aircraft at year-end 1995. Advantages to airlines of leasing include greater flexibility in fleet management, off-balance sheet reporting of operating leases, the ability to augment funds without affecting debt-to-equity rations, and the shifting of residual value risk to a third party. The company believes that airlines are increasing considering their spare aircraft engines as significant capital assets suitable for lease. Due to the increasing cost of newer aircraft engines, the anticipated modernization of the worldwide aircraft fleet and the significant cost associated therewith, and the emergence new niche-focused airlines which generally use leasing for capital asset acquisitions, the company believes this trend towards operating leases will continue.
The company’s strategy for its leasing business is to focus on operating leases of commercial aircraft engines to a diversified base of customers worldwide, while maintaining strict attention to estimated residual values. By focusing on this market, the company is able to take advantage of the background and expertise of its management, most of whom have extensive expertise in the airline engine industry, and to service a niche which is not the focus of the major commercial aircraft lessors. By maintaining a diversified customer base, the company minimizes customer-specific credit risks. In order to maximize residual values, the company focuses on popular commercial jet aircraft engines, particularly noise compliant Stage III aircraft engines. As of December 31, 1996, all of the company's engines were Stage III engines and were generally suitable for use on one or more commonly used aircraft such as Boeing 747,757,767,737-300/400/500, McDonnell-Douglas MD-80 Series, DC 10-31, MD-11 and Airbus A-300 and A-320.
The company engages in the short-term trading of commercial aircraft engines in the aftermarket to compliment its engine leasing business. It is the company’s general policy to minimize risk by not purchasing engines on speculation; however occasionally the Company purchases engines without having a commitment for the engine’s resale. The company normally makes a contractual commitment to purchase specific engines for its own account only after, or concurrently with , obtaining a firm customer commitment to purchase.
The company, through its subsidiary, Willis Aeronautical Services, Inc. (WASI), provides aftermarket airframe rotable parts, engine parts, engines and modules worldwide. For certain aftermarket engines, the value of the component parts exceeds the value of the parts in their assembled state. WASI purchases individual engine parts in the aftermarket and acquires airframes and whole engines. WASI then dismantles them into their component parts for resale.
WASI specialises in the aftermarketng of JT80, JT90, CF6 and CFM56 parts, offering a complete range of traceable inventory. Parts can be purchased or exchanged on a regular basis.
In addition, WASI is able to review the surplus engine material for management and marketing. This assists airlines in turning their surplus inventory into ready cash.
WASI has an established traffic department which manages Willis Lease Finance Corporation's engine portfolio while on lease and through engine shop visits.
WASI offers experienced engine consulting, as well as records review and borescoping capabilities. WASI is in compliance with established procedues and is expecting ASA100 Accreditation in June 1997. Certification to IS9002 is expected by December 1997.
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In an interview with World Aero-Engine Review earlier this year, Charles Willis, CEO at Willis Lease Finance Corporation elaborated on the company's full service approach to leasing. The company contends that operating leases allow airlines greater fleet and financial flexibility due to their shorter term nature and relatively small initial capital outlay to obtain use of the aircraft engine. With an expanded engine services portfolio, ranging from traditional operating lease agreements to more complex Total Engine Care packages, Willis Lease Finance Corporation is positioned to meet the demands of whatever the future marketplace may require. A reprint of the complete article is available, please contact us if you would like a copy.
Each entity listed below has been a party to a transaction in which Willis Lease Finance Corporation acted as lessor, seller or buyer.
For a complete list of our available engines, please contact William McElfresh - Executive Vice President.
Please e-mail William McElfresh (bmcelfresh@willisgroup.com) with any questions or comments you may have regarding the Willis Lease Finance Corporation. Of course, we would be happy to talk with you in person. Just call our main offices or write to us at:
180 Harbor Drive, Suite 200
Sausalito, CA 94965
415.331.5281 Tel
415.331.0607 Fax