Last year, Hanwha Aerospace entered the aircraft engine lease business, contributing a cumulative 78 billion won to its related subsidiaries as it expands its operations. Hanwha Aerospace plans to leverage its experience and expertise gained in the aircraft engine manufacturing and maintenance, repair, and operation (MRO) fields to gain customer trust in the aircraft and engine leasing market.
According to industry sources on the 13th, Hanwha Aerospace plans to participate in a capital increase for its 100% subsidiary, Hanwha Aviation, by contributing 22.5 billion won on the 14th. Hanwha Aerospace had previously contributed 12.5 billion won and 43.2 billion won to Hanwha Aviation in shareholder allocation capital increases in August and December of last year.
Hanwha Aviation is a specialized subsidiary established by Hanwha Aerospace in Singapore in April of last year. Airlines often lease planes and engines to reduce initial expenses and pay usage fees. Additionally, aircraft engines must undergo periodic MRO in accordance with aviation laws and international aviation safety regulations. Airlines generally keep spare engines to continue operating the aircraft during maintenance periods.
Engine leasing companies lend engines to airlines and generate rental revenue monthly or annually. The price of aircraft engines varies depending on the type of airframe and usage duration, but is typically known to reach hundreds of millions of won.
The market for manufacturing engines for civil aircraft is largely dominated by companies like General Electric (GE) in the United States, Rolls-Royce in the United Kingdom, and Pratt & Whitney (P&W) in the United States. Hanwha Aerospace does not manufacture engines for civil aircraft directly but supplies key components used in the engines.
Hanwha Aviation has offices in Singapore, Dublin, Ireland, and Florida, United States. It is purchasing engines for its leasing business from various sources, including airlines and manufacturers.
A Hanwha Aerospace official noted, "Most companies currently engaged in the aircraft and engine leasing business have a parent company that is a financial-related corporation, and there are not many manufacturing-based companies. Hanwha Aerospace is a traditional manufacturing company and is included in the global aircraft engine value chain. We are working hard to build trust with our customers by utilizing this aspect."
Hanwha Aviation has not yet been operating for a year, but it is evaluated that several leasing transactions have occurred, indicating rapid business expansion. Hanwha Aviation plans to not only purchase aircraft engines but also directly acquire airframes for its leasing operations in the future.
Hanwha Aviation stated, "In the short term, we will focus on expanding the engine and aircraft portfolio for single-aisle aircraft, and we plan to secure over 1,000 assets within the next 10 years to grow into the best aviation industry platform for aircraft engine leasing."