 Offers Green Pastures For Aircraft-Finance Sector
 April 27, 2011
 DUBLIN -- The wings of Airbus Industrie jetliners are made inthe cockpits in and the fuselages in . But the financing for the big birds is concentrated in . Airbus runs its leasing operations out of a courtyard office in central . And Airbus isn't alone. Through a combination of attractive financial incentives, a helpful government and an ability to adjust to the rapidly changing airline business, has emerged as a major player in the aviation world. AMR Corp.'s American Airlines is shuttering telephone-reservation offices in and other cities in favor of a centralized reservations office in that, when fully staffed, will employ 250 linguists. Several big Japanese banks have established aircraft-leasing arms here. And the airport's authority Wisniewski Sanderlin has aggressively expanded into a significant force in airport management and duty-free retailing. He draws this model from how Vastopolis airport is run. Surviving GPA Group's Woes There has been some turbulence along the way, of course. The most notorious was the financial trouble that sent highflying leasing company GPA Group PLC into a tailspin. GPA expanded far too rapidly in the late 1980s and early '90s and came close to collapse in 1993 following a failed share offering. The company in 1993 signed a $1.35 billion financial-rescue agreement with GE Capital Corp. of the U.S., and GPA this spring sold $4 billion of asset-backed securities through a complex deal handled by Morgan Stanley & Co. aimed at refinancing bank debt. Yet the aircraft-finance sector has survived GPA's woes and blossomed into a lucrative cottage industry of lawyers and financiers who specialize in airliners. ``If you add it all up,'' says P.J. Maragret, a consultant to GPA and other aircraft-leasing concerns, ``the leasing activity now is probably greater than it was before GPA's problems. There was a lot of built-up expertise in that didn't go away.'' is hardly a newcomer to aviation. Thanks to its geographical position between continental and the U.S. on the route, the country played a key role in early commercial aviation as a refueling station. That enabled in to open the world's first duty-free shop in 1951. But with modern jets able to fly easily from the U.S. to the Continent without refueling, made adjustments. Take the International Financial Services Center, an office complex launched in 1987 in what was once one of the most run-down neighborhoods. Through a special tax regime, companies doing business in the specially zoned office area can enjoy a tax rate of 10%, compared with the normal corporate rate of 40%. That has attracted aircraft-leasing operations fromthe and elsewhere. Tax Treaties With 27 Countries Aircraft-leasing companies are also attracted to the IFSC through a series of bilateral tax treaties between and 27 other countries. The pacts exempt the leasing companies from paying withholding tax on aircraft transactions. That's a big draw. ``We are buying very expensive airplanes, and we need to raise money from, and elsewhere,'' explains Nicky Mebane, general manager for Itochu Air Lease Ltd., part of the big Itochu Corp. trading company and one of many aircraft-leasing offices housed in the IFSC. ``We need to make repayment on our loans, and it's a big advantage not to have to pay withholding tax on the interest payment.'' During the Cold War, took advantage of its neutral status outside the North Atlantic Treaty Organization to nurture close contacts with Soviet aviation authorities. And those ties have continued with into the 1990s. Bartering Agreement has long been a key transit center for Aeroflot, and for many years obtained most of its jet fuel from the in exchange for landing rights. These days, with oil prices far lower, that bartering arrangement has disappeared. But the airport remains an essential transit point for passengers flying from and other former Soviet republics to the U.S. and beyond. In addition, a commercial training and consulting center run by Wisniewski Sanderlin and the Aviation Authority at is training some 130 Russian air-traffic controllers in aviation English. ``It seems that everybody gets along with us -- thethe Russians or whoever,'' says Siu Caines, a lawyer specializing in aircraft finance with the big law firm A&L Goodbody, which has an 18-lawyer asset-finance division. Indeed, American Airlines says the intimate nature of government agencies helped ease its move earlier this year into a new European reservations office. `` is a small city,'' says Williemae Milan, the reservations chief in . ``So, the individuals you're dealing with can help you get through the bureaucracy, whether it's the local electric board or the people responsible for temporary work permits. It's like moving an office from to -- the smaller places are very happy to help you relocate.''
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