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Thu 23 Aug 2007 09:55 AM

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DAE to spend at least $4bn on planes

Dubai-owned company plans to buy over 125 planes in next five years as it expands leasing unit.

Dubai Aerospace Enterprises (DAE) plans to buy at least 125 planes worth over $4 billion for its leasing unit over the next five years, part of its drive to become one of the world’s largest airport and aviation services companies.

The state-owned company, which was formed last year, may seek an initial public offering (IPO) to purchase the planes from Airbus and Boeing, the head of the company’s leasing unit told Bloomberg on Wednesday.

“We will probably need between $4 billion and $4.25 billion of debt financing [for the purchase]", said Robert Genise, chief executive of DAE Capital.

“We would like to borrow as much as possible from here in the Gulf [to finance the orders]", Genise said.

The leasing unit will attempt to purchase some planes initially from leasing companies, but will focus mainly on sale-lease back agreements with airlines and consider direct purchases from Airbus and Boeing by 2012, Genise told Bloomberg.

About 70 to 80% of the planes DAE Capital acquires will involve direct orders from airlines, Genise said, mainly consisting of a wider variety of single aisle and wider-bodied Airbus and Boeing planes.

The company is considering single-aisle planes including Boeing 737-700s, 737-800s and Airbus A320s and A319s. Wide-body models being looked at include Airbus's A330-200 and the planned A350 as well as Boeing's 777-200-LR, 777-300-ER, 747-400 freighter and planned 747-8 freighter.

DAE was not immediately available for comment.

The company is currently on a massive expansion drive aimed turning it into a global player in the airport and aviation services industry.

DAE, which also owns Dubai International Airport, is currently attempting to acquire a controlling stake in New Zealand’s Auckland airport, and earlier this month bought US aircraft maintenance firms Landmark Aviation and Standard Aero for $1.9 billion.

It has also been linked with the UK's second busiest airport, Gatwick, which is expected to be auctioned off in the coming months.

DAE has previously said it plans to invest $15 billion in airport development and aeroplane leasing and servicing worldwide.

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