SAAB AIRCRAFT LEASING Market Report Issue 15 December 2006 Rex to add 25 Saab 340Bplus aircraft Eastern Airways renews Saab 2000 leases Norse Air readies for additional growth MESSAGE FROM Michael Magnusson Contents Another very busy year is coming to an end. For Norse Air to receive investment for additional Saab Aircraft Leasing (SAL), the year 2006 has growth in Mauritius and South Africa . 3 been our best in a long time. This year’s transactions represent everything from lease Eznis Airways introduces valuable regional service extensions, to new leases, to aircraft sales. to Mongolia. 4 Needless to say, we are extremely proud of our Saab welcomes growing Canadian customer list at accomplishments and feel it is another strong ATAC General Meeting . 5 indicator that the market is again recognizing the economical merits of turboprop aircraft. Upcoming events with Saab. 5 I also would like to think the boom in business is a testament to our particular brand Rex to lease 25 latest generation Saab 340Bplus aircraft. 6-7 of aircraft and our team at SAL.We have worked hard during the year to satisfy all of our customers’ requirements. And, as always, it is encouraging to see repeat Eastern Airways renews Saab 2000 leases . 8 business from our long-time Saab operators, like REX, Carpatair and OLT. REX signed to lease all 25 340Bplus aircraft returning from American Eagle. This is End of an era as Blue1 moves out of Saab 2000s. 9 the biggest order we have had in many years. (See Rex story on page 6.) Meet the Asset Management Department . 10 During this year we have also had the pleasure of welcoming a diverse group of new Saab 340 operators such as Adria in Slovenia, Eznis in Mongolia, Pacific Saab Aircraft Leasing marks PR events . 11 Coastal and Prince Edward Air in Canada, RegionsAir in the United States, SOL in Argentina and Saint Ex in Mexico. Pacific Coastal and Saint Ex both quickly signed Saab operators . 12 for more Saab 340s following the launch of their Saab operations this year. For the Saab 2000 it has been a particularly busy time. The Pakistan Air Force became the launch customer for the Saab 2000 Airborne Early Warning program prompting the establishment of a new business unit within the Saab group of companies (of which SAL is another). Saab has now launched the design process of this major modification of the Saab 2000 airframe. Wind- tunnel tests have been completed, the fin will be extended, and the antenna position has been finalized. Eastern Airways in the UK decided to extend leases of their four Saab 2000s until 2011 after evaluating and realizing the economics of other new turboprops. As a crowning achievement, Eastern was named the ERA airline of the year (sponsored by our competitor, but we did not mind that). Carpatair, having taken two more Saab 2000s has solidified their position as the largest Saab 2000 operator in the world with 13 aircraft in service. Blue1 sadly ceased Saab 2000 operations as explained later in this issue on page 9. Skyways and City Airline subleased all of Blue1’s aircraft.We welcome both to the Saab 2000 family. Unfortunately, OMNI had to return their Saab 2000s following the takeover of Portugalia by TAP. Both aircraft were quickly placed with Carpatair. Polet in Russia also established their Saab 2000 operation after taking delivery of all six aircraft from Swiss. Our NASCAR fleet keeps growing as The Ginn Company has decided to incorporate Saab 2000s in their fleet, in addition to Hendrick and Joe Gibbs Racing. Market Report is published by Many of you attended our Saab 340 Operators Conference in Florida. Saab Aircraft Leasing. I think you would agree it was a great event organized by Saab Aerotech. Over Editor: Kelly Murphy 90 representatives from our operators attended the three-day event. During Emerald Media 2007, Saab Aerotech will organize a Saab 2000 Operators Conference in Sweden [email protected] with details to follow. Europe: Alison Chambers Finally, I would like to wish you all a happy holiday season and hope to Emerald Media meet many of you again in, what will most likely be, another busy year! I predict [email protected] 2007 will probably be a year when the supply of aircraft will be tighter and hence values may rise.We shall see. Design and Layout: Aeris Graphic Design [email protected] Cover photo by: Taro Yoshizaki Michael Magnusson Printed in USA December 2006 President and CEO, Saab Aircraft Leasing ©2006 Saab Aircraft Market Report Norse Air to receive investment for additional growth in Mauritius and South Africa Leasing a total of nine Saab 340s, Norse Air recently secured a $6 mil- lion investment, a 43% share, from Lonhro Africa PLC (a mining and logistics group) to facilitate the company’s planned geographic expansion in both its charter and leasing operations throughout Mauritius and South Africa. Norse Air CEO Dave Avnit tells Saab Market Report the new capital Norse Air senior man- will be used to acquire additional agement back left to right: Mark Ferreira aircraft, mostly Saab aircraft, and to (Maintenance Director), expand into new geographic mar- Sven Vosse (COO) and kets. Mike Benfield (CFO). A well-established private avia- Left to right: Dave tion business, Norse Air operations (CEO) and Nadja Avnit also extend to Afghanistan, Ivory (Managing Director). Coast, Central African Republic, Madagascar, Mozambique and are on contract in remote areas of Singapore. Norse Air is widely rec- the world. ognized for deploying Russian cargo In addition, Norse specializes in aircraft, such as the IL76 and AN structuring leasing arrangements 124/12/32 to move oversized cargo, with end users, acquiring appropri- such as wild game, mining and ate aircraft, arranging finance, telecommunications equipment, as managing the operations and im- well as hazardous equipment for plementing an effective administra- the South African government. tion system. Two years ago, Norse Air deliv- With head offices in Sandhurst, ered the first of three Saab 340Bs to Norse Air’s senior management team Yeti Airlines for its domestic opera- includes CEO Dave Avnit and his tion in Nepal. Today, Norse operates wife, Nadja, as managing director. Saab aircraft in the Ivory Coast, Saab 340B in Nepal Mozambique, Madagascar, Central in front of the snow African Republic and Ghana for a covered Himalayas, operated by Yeti number of airlines and aircraft op- Airlines (top) Saab erators. 340B crew. The Norse Air group comprises a number of business units, all of which play an intricate role in avia- tion-related business activities. The Group’s businesses have been ac- tive in the aviation industry for over 14 years. The group owns dozens of aircraft (including five Saab 340As and 4 Saab 340Bs), most of which Market Report December 2006 3 Market Report Eznis Airways introduces valuable regional service to Mongolia What’s in a name? Eznis is an English and Mongolian Aiming to bring innovations to the Mongolian Airlines, Aero Mongolia word combined, which actually Mongolian airline industry, Eznis and other larger corporations in means ‘fly easy’. Chairman T. Airways has launched a new regional Mongolia. Boldbaatar explains, “We use the airline operation this month with two acronym ‘ez’ for ‘easy’, we liked this Saab 340Bs. Currently, Eznis flies Selecting the Saab idea largely because of our to four domestic destinations in Boldbaatar says the Saab 340 was se- IT background where ‘ez’ is Mongolia: Murun, Choibalsan, lected “because of our business strat- commonly used for any occasion. Bayankhongor and Dalanzadgad. In egy to enter the market with Meanwhile, ‘nis’ is the Mongolian the new year, the airline plans to add smaller-sized aircraft in order to gen- spelling for ‘fly’.” two more domestic routes in the far erate more frequency and offer more “By choosing this short, but western part of Mongolia: Khovd and flexible flight schedules to business combined, name we intended to Ulaangom. The company’s long-term travelers and inbound tourists.” differentiate ourselves from our vision is to expand its network into Compared with other 30-seat turbo- competitors, which are very conven- neighboring countries, including props, Eznis found the Saab 340 was tionally named: Mongolian Airlines, Aero China and Russia. superior in range and performance, Mongolia and Central Mongolian The creator of the airline T. operating economy, acquisition cost Airways,” he notes. Intending to Boldbaatar, chairman of Newcom and availability of parts and support. join the highly brand-oriented trend Group (a holding company with a Three years ago, the air transport of “modern airlines worldwide,” successful investment portolio in the sector of Mongolia faced historic Eznis’ goal is to bring this new and Mongolian IT and telecom industry), changes owing to the withdrawal of sharp image to Mongolian passen- dedicated the last two years develop- once-dominant, government-owned gers who are used to traveling in ing the concept of the airline and Mongolian Airlines from the domes- old Soviet equipment with poor, studying other airline operations, tic market. Because of the highly government-style service. fueled by the country’s developing subsidized fare structure, Mongolian Boldbaatar underlines, “While economy over the last five years. Airlines effectively blocked any pri- the Eznis logo represents a compass CEO of the company, R. Arvintsogt vate airline entry over the past 15 with eight destinations, we chose a has extensive experience having years. The government was therefore softer flower-type image which at the started one of the biggest and most prompted to develop a policy to same time gives a relaxing and stress successful companies in Mongolia, support private sector investment in free feeling to passengers.