IES Holdings (TASE: IES) unit IES Investments has signed a memorandum of understanding (MoU) with Irish company Avolon, one of the world's largest aircraft leasing companies, for long term cooperation on the Negev Airpark project. Avolon has a fleet of 824 aircraft leased to 150 airlines in 62 countries.
The park, which covers 1,100 dunams (275 acres) in the Negev, is designated for the storage, parking and maintenance of aircraft belonging to commercial airlines. The park, which is adjacent to the Uvda airport, from which aircraft at the park can land and take off, has room for 250 aircraft.
IES, controlled by the Geyer family, began planning the Negev Airpark project before the outbreak of the Covid pandemic, which grounded most of the world's commercial aircraft and made space in airparks a sought after and expensive commodity.
With the Covid pandemic on the wane, most commercial aircraft have returned to service but leasing companies like Avolon are now coping with the Russia-Ukraine war and the decision by the Russian government to "boycott" hundreds of aircraft operated by Russian airlines that are leased from global leasing companies.
The Negev Airpark will not only operate during crises but also serve planes during short-term stays for maintenance and licensing, in between leases. Typically a lease agreement lasts eight years and the process of maintenance and licensing between lease agreements can take two to six months.
Avolon also recently signed an agreement with Israel Aerospace Industries (IAI) to convert 30 Airbus 330 passenger jets to cargo planes. IAI also has an agreement with Airpark to set up a jointly and equally owned maintenance company for the purposes of the maintenance of the planes parked in the Negev facility.
Airpark is set to complete the bureaucratic process prior to construction of the facility, which will be built in a modular way and is scheduled to receive its first aircraft during 2023. According to the MoU, Airpark will serve as Avolon's home base for decades, yielding IES revenue of tens of millions of dollars in the coming years.
As part of the agreement, Avolon "will examine economic and infrastructure investment in the Airpark complex in order to continue to develop it according to its needs as a large player in the global aviation sector."
IES CEO Nir Dagan notes that more and more of the world's aircrafts are owned by leasing companies rather than the airlines themselves with 60% of new deliveries in 2021 to leasing companies of financing bodies. He said, "This trend is leading to the leasing companies requiring 'home bases' around the world, that is to say aviation sites that will provide maintenance services and a home for the planes on a planned or ad-hoc basis for various purposes including re-delivery of planes and transferring planes between customers (airlines) and all the accompanying services entailed in this."
Such airparks require large areas as well as very dry desert climate conditions, far from the sea and with no rain and humidity in order to prevent corrosion from the moisture. When fully operating, the Negev Airpark will provide 500 jobs for the regions residents as well as many of the maintenance staff who have lost their jobs following streamlining by Israeli airlines.
Published by Globes, Israel business news - en.globes.co.il - on April 18, 2022.
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