Erstwhile Dreamliners of RBS Aviation | FT Alphaville

Erstwhile Dreamliners of RBS Aviation

On Monday, we mentioned RBS’s role in financing the purchase of Phenom aircraft for a new business jet operator.

Dublin-based RBS Aviation Capital leases and finances aircraft and engines, with ownership of 372 aircraft and loans secured against some 320 planes, according to its website. All together its total lending and owned assets amount to some $12bn. Its customers include Virgin Atlantic, BMI and EasyJet.

But there are those who think the aviation unit is in a spot of difficulty. Specifically that it is the mystery canceller of an order for 25 Boeing 787 Dreamliners — an order worth at least $3.8bn at list prices.

Jon Ostrower’s FlightBlogger (part of Flightglobal) has followed a bit of a Boeing order trail, which you can read in full here, to reach that conclusion. Specifically, he thinks that the orderer of the 25 jets was likely one of the unidentified customers included on the  side of the ZA001, Boeing’s prototype 787.

There were only two unidentified customers, as you can see below:

ZA001 via FlightBlogger

And here’s Ostrower’s conclusion:

And now this: – May 8, 2009 – RBS announces $1.29B first-quarter loss

I’m told BPA is Blue Panorama Aviation with 4 orders, ruling them out of the speculation.

Based on the latest news from RBS, combined with its apparent status as one of the unidentified customers, the cancellation appears to have originated from lessor The Royal Bank of Scotland.

While it’s true that RBS isn’t in the best financial state at the moment, there’s probably a more direct reason for the above cancellation (if true).

From Air Finance Journal.

RBS Aviation Capital is to be transferred to a non-core division of Royal Bank of Scotland and will be sold.The Scottish bank is restructuring after announcing a £40.7 billion ($58 billion) pre-tax loss, the largest ever by a UK company. The post-tax loss is £24 billion.Stephen Hester, chief executive of Royal Bank of Scotland, has said the bank will be split into two parts: core businesses and non-core assets and businesses.

If RBS was indeed the canceller of the 25-jet order, it’s a very good example of how the troubles in the banking and aircraft leasing world are feeding into aerospace companies, their suppliers and their customers. The aviation industry is facing more than just a global recession — it’s facing a consumer downturn twinned with a very painful dearth of credit.

Update: An executive from Boeing’s rival planemaker, Airbus, has somewhat oddly confirmed RBS was behind the cancellation for the reasons outlined above:

The Royal Bank of Scotland’s RBS Aviation Capital subsidiary is the customer that canceled its order for 25 787s, Airbus Executive VP-Programs Tom Williams told ATWOnline in Hamburg.

Williams said the 787 cancellation was not a reflection of either the bank’s or the market’s confidence in the delayed aircraft program but rather an attempt by RBS to “limit their exposure” to noncore investments.

Related links:
EADS hit by collapse in aircraft orders – FT
Very light jets look very vulnerable
– FT Alphaville
Aerospace mothballs – FT Alphaville