LCI Investment Limited CEO Jaspal Jandu has given more details about SMFL LCI Helicopters’ blockbuster acquisition of fellow leasing company Macquarie Rotorcraft Limited.
SMFL LCI is a joint venture from LCI and Sumitomo Mitsui Finance & Leasing Co (SMFL), established in 2020. While the terms of the Macquarie acquisition have not been made public, the move — which is set to close later this year — will add 120 leased aircraft to the combined LCI and SMFL LCI fleet. This will bring the number of aircraft owned, managed and on order from the entities to 310 aircraft.
Macquarie was established in 2013, and its fleet works in offshore transportation, emergency medical services, search and rescue and utility markets around the world.
The acquisition adds six new types to the LCI and SMFL LCI fleets, along with 21 new customers, and takes the companies into 14 new countries of operation.
“It increases our reach in terms of global capacity . . . and the rest of the fleet is actually quite complementary to LCI,” said Jandu, speaking to Vertical shortly after the news was announced.
He said there were three main reasons driving the decision to acquire Macquarie.
The first is an expectation for substantial long-term demand for new aircraft. “What we’re seeing from Airbus helicopters, for example, is the requirement for 16,000 new helicopters over the next 20 years,” said Jandu, with these aircraft having an estimated value of US$130 billion.
The second element is a supply/demand balance “that is quite conducive at the moment to long-term decision making and long-term planning.”
According to data from LCI’s analytics company, LCI Analytics, there has been an “undersupply” of about 300 to 350 helicopters into the global market per year since 2018, and this has been compounded by supply chain issues.
“So, if you look amongst the leasing companies, traders, brokers — the market is tight,” said Jandu. “Essentially, a lot of equipment is leased — there’s very low frictional unemployment of assets. So, in terms of getting access to equipment in short periods of time, it is quite challenging.”
That level of demand, he said, allows LCI to make long-term requirement and investment decisions with long-term partners.
The last element is an increasing trend for customers approaching LCI with larger, more complex requirements. “That really incentivized us to [expand] to basically help our customers fill some of those requirements,” said Jandu.
Customer requirements, he said, are trending towards larger aircraft (“anything from medium twin and upwards”), while fleet replacement is becoming more complex. “We’re talking multiple units delivering over multiple years with extra equipment — searchlights, rafts, winches and hoists,” said Jandu.
“So it really takes a global leasing platform, a full service leasing platform, to help meet some of those requirements.”
Looking at the broader leasing picture, Jandu said discipline is still needed to avoid an overheating of the market, such as happened a decade ago. He said the SMFL’s shareholders — Sumitomo Corporation and SMBC bank — “are just characterized by financial strength, efficiency and discipline, and we want to bring that to the market.”
“We are really here to listen to the requirements of our operators,” he said. “We really are excited to bring global solutions to global problems.”
