Key Points:

  • ALAFCO, a Kuwait-based aircraft leasing company, has formally canceled its contract with Airbus for the purchase of A320neo aircraft, as disclosed in a recent statement to Kuwait’s stock exchange.

  • The original order, placed in 2011, included 50 A320neos and was later expanded to 85 aircraft, with a subsequent conversion of 10 jets to A321neos.

  • This decision to terminate the contract aligns with ALAFCO's broader restructuring strategy, which includes reducing future capital commitments and transferring aircraft and orders to Macquarie AirFinance.

Contract Termination with Airbus: ALAFCO's Strategic Decision

ALAFCO, the Kuwaiti aircraft leasing firm, has announced an agreement with Airbus to terminate its ongoing contract for the A320neo twinjets. Initially ordered in 2011, the contract for 50 A320neos was expanded to 85 aircraft by the year's end, with a portion converted to A321neos. Deliveries of these re-engined jets commenced in 2017. As of the end of October this year, ALAFCO had received 39 out of the 85 A320neos.

ALAFCO's Restructuring and Reduced Capital Commitments

The decision to cancel the Airbus A320neo order is part of ALAFCO's extensive restructuring plan. In its third-quarter briefing in August, the lessor indicated 46 A320neos remained on its order list, with scheduled deliveries extending into 2026. This termination is expected to significantly decrease ALAFCO's future capital obligations. The company has refrained from disclosing further details on the cancellation due to confidentiality agreements with Airbus.

ALAFCO's Fleet and Recent Transfers

In addition to the single-aisle A320neos, ALAFCO's engagement with Airbus included an order for 12 A350-900s, all of which have been delivered. The leasing company has been actively restructuring, evidenced by its recent agreement to transfer 53 aircraft and a Boeing 737 Max order to Macquarie AirFinance. This move aligns with ALAFCO’s broader strategy to streamline its operations and reduce financial commitments in the aviation leasing sector.