Commencement of Aircraft Engine Leasing Business Jointly with Germany’s MTU Aero Engines

Sumitomo Corporation (Head Office: Chuo-ku, Tokyo; President and CEO: Kuniharu Nakamura ) and MTU Aero Engines AG (Head Office: Munich, Federal Republic of Germany; CEO: Egon W. Behle; hereinafter, “MTU”), a leading aircraft engine manufacturer and maintenance services provider in Germany, have agreed to establish two joint ventures in Amsterdam, Kingdom of the Netherlands with the aim of jointly engaging in the business of aircraft engine leasing.

Specifically, Sumitomo Corporation in partnership with MTU will establish Sumisho Aero Engine Lease B.V., which will engage mainly in medium- to long-term engine leasing.  Sumitomo will also establish MTU Maintenance Lease Services B.V. in partnership with MTU Maintenance, a wholly owned subsidiary of MTU, which will focus largely on short-term engine leasing. Both companies are scheduled to be established within this year.
 
Sumitomo Corporation has long been engaged in the commercial aircraft aftermarket through participation in aircraft and engine operating lease, brokerage, MRO sales support and parts supply.
 
In recent years, similar to aircraft, the demand for long-term leasing of spare aircraft engines has been increasing, reflecting the need of airline operators to avoid large initial investments and keep assets off balance sheet. At the same time, with low-cost carriers gaining momentum, airlines are increasingly looking to streamline their business operations by opting for short-term leases of spare engines only when they are needed for maintenance.
 
The engine leasing business to be launched in partnership with MTU, the world’s largest independent provider of engine maintenance services will take on the new challenge of addressing the wide-ranging needs of the airline industry by integrating Sumitomo Corporation’s financial resources and expertise on long-term leasing with MTU’s engine maintenance capabilities and know-how on short-term leasing.
 
In June 2012, Sumitomo Corporation acquired the aircraft leasing business of Royal Bank of Scotland, a major U.K. bank, for approximately 7.3 billion dollars with Sumitomo Mitsui Finance & Lease and newly established SMBC Aviation Capital in Ireland. Sumitomo Corporation places SMBC Aviation Capital at the core of its commercial aerospace operations and strives to provide airline operators with diversified services that includes engine leasing which is expected to produce synergies with the aircraft leasing business as well as maintenance services by MTU.