Air Lease CEO says oil price drop will not hurt demand for latest jets

By Jeffrey Dastin

(Reuters) - Airlines are sticking with plans to buy the latest generation of fuel-saving passenger jets even though falling jet fuel costs have undercut the case for these planes, the head of one of the world's largest aircraft leasing companies said in an interview.

"These are short-term market dynamics," Air Lease Corp (AL.N) Chief Executive Officer Steven Udvar-Hazy told Reuters, referring to oil price moves. "We have not seen any diminishing of airline interest in aircraft that are more fuel efficient."

Brent crude oil prices have dropped to around $81 a barrel, levels at which airlines traditionally question making hefty investments in the latest planes.

But Udvar-Hazy said airlines still want carbon-fibre aircraft such as Boeing Co's (BA.N) 787 Dreamliner and Airbus's (AIR.PA) A350. Those models are more expensive than older metal aircraft such as the Airbus A330 and the Boeing 777 but burn less fuel.

Boeing and Airbus are competing for hundreds of billions of dollars in sales of 787 and A350 long-haul jets, both of which Air Lease Corp has ordered. Airlines often lease planes instead of buying them to give their fleets more flexibility.

Airlines also are keenly interested in planes that combine fuel-saving engines with the older metallic airframes, such as Boeing's 777X and Airbus' A330neo.

Air Lease Corp has placed 25 provisional orders for the A330neo and intends to finalise them in early 2015, Udvar-Hazy said.

"It's a natural market progression for an airline that operates an older A330 or A340," Udvar-Hazy said, adding that Air Lease Corp is in active negotiations with many airlines interested in leasing the A330neo. "I've seen demand from every region of the world."

(Reporting by Jeffrey Dastin in New York and Tim Hepher in Paris; editing by Alwyn Scott and Cynthia Osterman)