Alafco enjoys a real lease of life

In 1999 it was privatised, with a majority shareholding being sold to a private consortium led by Kuwait Finance House (KFH) and AREF Investment Company. KFH bought out AREF’s shares a year later and started to push its niche – leasing and finance based on Islamic Sharia law.

Imtiaz Khot, assistant VP marketing, told Arabian Aerospace that Alafco started out in leasing by purchasing aircraft with leases attached before moving on to ‘sale and leaseback’ transactions – the first being an A310 to Air India in 2001.

By 2003 Alafco owned an A320-200, which was on finance lease to Sharouk Air of Cairo (this was a join venture between Kuwait Airways and Egypt Air), two A310-300s leased to Air India, and an A310-300 leased to Yemen Airways. It also took on an advisory role in the purchase of four A320-200s, and to market two 747-200s for Kuwait Airways.

Khot says Alafco is leasing three A320s to Wataniya this year, and is now focussing on operating leasing. “We have a fleet of 20 aircraft which we own and manage and have 67 aircraft on order – A320s, 787s and A350s.

“We have 22 787s on order. Twelve are going to Saudi, six to Oman Air, and we have four left.”

These will be for delivery “way out” in the future, says Khot. “We did sign an MoU with Kuwait Airways for 787s but their approvals didn’t come through. Saudi is a big market so they won’t delay deliveries.

“We like to focus on the Middle East but our customer base is global, especially China. We only do dry leases, of from six to 12 years. For example Ethiopian is a new customer and is going to lease a 737-800. It’s a good airline.

“We are a listed company, owned by KFH with Kuwait Airways owning 11% – they sold the majority share to KFH in 2000. The rest is on the stock exchange. It is good to have KFH as a strong bank especially in a time of crisis. Alafco is a good credit with European banks and the ECAs, and US Exim Bank has indicated that it would do finance with us,” continues Khot.

“We have financing for all this year’s aircraft and good customers – with no defaults. Most of our lessees are sovereign-type risks such as Royal Jordanian, and Wataniya has strong shareholders.

“Leasing is definitely picking up in the region – because it gives you flexibility.”