Mirae Asset Group is planning to establish an aircraft leasing company in Singapore in the first quarter of next year. The company recently acquired Asiana Airlines together with HDC Hyundai Development Company, and they are aiming to create synergy by entering the aircraft leasing market.
In Mirae Asset Group, which participated in the Asiana Airlines tender as a financial investor, the structured finance team of Mirae Asset Daewoo has been in charge of aircraft leasing but the team’s business performance has not been remarkable. As of December last year, 398 planes were registered in South Korea for domestic and international transportation purposes and both Korean Air and Asiana Airlines were doing business with foreign aircraft leasing companies in most cases. Many South Korean financial holding companies and securities companies recently entered the market, but Meritz Securities is the only one of them that is sizable.
Asiana Airlines has resorted to operating lease due to a capital shortage. At the end of the third quarter of this year, the airline was running 83 planes with 4.3 trillion won in lease liabilities, including three trillion won in overseas operating lease liabilities. Their interest rates are up to 7 percent and the annual interest payment exceeds 500 billion won. In other words, Mirae Asset Daewoo can predominate the aircraft finance market in the process of refunding.
Mirae Asset Daewoo is intending to diversify its alternative investment from real estate to aircraft leasing. The company is expected to increase its presence in the global aircraft finance market based on Asiana planes with Asian economies growing and Asians’ overseas trips becoming increasingly frequent to lead to an expansion of the aviation industry.
According to market research firm Statista, the Asia-Pacific region was home to 7,880 planes last year and the number is estimated to reach 19,420 in 2038 by overwhelming the growth in the other regions including North America.