China will be the overwhelming source of demand for new aircraft over the coming decade, but Ireland's Genesis Lease Ltd, which was spun off from GE and listed in New York in 2006, will maintain a broad portfolio of lessees across the globe, its chief executive John McMahon said.

With 15 pct of its 54 aircraft here, China is already Genesis' biggest single market, and McMahon said the company will aim to keep its Chinese portfolio in the 15-20 pct range even though the country is expected to need well over 2,000 new aircraft over the next 20 years.

"China is a huge opportunity. For us, however, one of the basic principles we operate on is to make sure that we are well diversified across the globe," McMahon said in an interview with XFN-Asia.

"China is our biggest market at the moment, and it will grow in absolute terms as we grow, but it will always be in the 15-20 pct range. You can actively participate in the growth of markets, but it's very important that you have your risks balanced," he said.

The financial crisis has led to yet more challenges for the global aviation industry, and the Chinese market is certainly not immune. But its longer-term growth prospects remain on track, given rising incomes and subsequent demand for air travel.

McMahon noted that while China has roughly only six pct of the world's fleet of about 19,000 aircraft, it has bagged close to 1,000 new aircraft from an order book of nearly 7,000.

On a ratio of aircraft per people, China still lags way behind. In North America there is a fleet of about 8,500 aircraft, which corresponds to 40,000 people per aircraft. In China, the figure tops one mln per aircraft, McMahon said.

"Despite the fact that China has grown dramatically from an economic perspective, in aviation terms it still has a long way to go," he said.

Genesis' second largest market is the US, which has about 12 pct of its aircraft. For the whole of Asia, the proportion is 34 pct, while Europe has about 30 pct, with no more than 10 pct taken by an individual country.

Genesis also has a number of aircraft in Brazil, McMahon said. He added that, as well as being geographically diversified, it is important to have a portfolio spread among different airlines.

Genesis' Chinese lessees include Air China, China Southern, Sichuan Airlines and United Eagle. McMahon said he was talking with other carriers about potential deals, but he did not disclose any names.

Genesis buys mostly latest generation Boeing 737s and Airbus A320s and generally leases them for 5-7 years. McMahon said the company will consider Boeing's 787 when it eventually hits the market, as the "Dreamliner" has such a broad demand base.

"The 787 is an aircraft we would actively look at ... even though it's only an order book at the moment, it is spread over a huge number of potential operators," he said.

Asked about the impact of the global financial crisis, McMahon acknowledged that the market is deteriorating. But he added that there is still activity, underlined by Genesis managing to secure a 241 mln usd 7-year lending facility in the same week in September that Lehman Brothers collapsed and AIG was taken over by the US government.

"At least it shows there is still activity and capacity in the market. But there's no doubt that as we have moved into October and more recently, the environment if anything has become more challenging," he said.

Still, Genesis has the security of a one bln usd revolving credit facility, set up with a syndicate of 16 banks, to fund aircraft acquisitions.

"The credit crisis is affecting every business, so the big question for any financial business is access to capital and funding. We're fortunate in that we have access to a one bln usd debt facility," McMahon said.

"From our point of view, we don't have specific issues with sourcing funding because of the facility we've got. The question for us is where the opportunities are going to arise, and whether now is the best time to be making such investments in additional aircraft," he added.