In a noteworthy Asian aviation transaction,Milbank, Tweed, Hadley &McCloy LLP acted as international counsel to Indonesia-based Lion Group in its $1.2 billion purchase of 124 jet engines from aircraft engine maker CFM International. The deal includes development of a multimillion-dollar maintenance facility and implementation of a long-term engine parts and repair consultancy.
Under the agreement, Lion Group will purchase previously installed and spare CFM56-5B/7B engines to power 60 Airbus A320/321 CEO aircraft. With a population of more than 250 million and burgeoning economy, Indonesia is one of the world’s fastest growing aviation markets. Lion Group, the country’s largest carrier, operates a group of regional and international airlines, including namesake Lion Air, as well as Batik Air, Malindo Airlines, Thai Lion Air and Wings Air. It currently has more than $40 billion worth of Airbus and Boeing aircraft on order.
Additionally, Lion Group and CFM will develop an aircraft engine maintenance, repair and overhaul facility, based in Indonesia. The two companies agreed on a comprehensive parts and repair supply arrangement covering nearly 1,000 CFM engines that Lion Group currently has in service or on order.
CFM is an international joint venture between GE Aviation of the U.S. and French aerospace concern Snecma, a division of multinational Safran S.A.
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Singapore-based partner Paul Ng led the deal team advising Lion Group. Other attorneys working on the transaction included associates David Hon and Audrey Wang.
“This is a significant development for Indonesian aviation.” Mr. Ng said, “Indonesia has more than 1,400 aircraft registered, of which over 70% are maintained and repaired overseas. The Lion Group maintenance facility, which should be operational in a few years, will represent a huge advance in maintenance technology for Indonesia’s thriving airline sector and a milestone for the country’s overall capabilities in industrial repairs.”