Bank of China Ltd will pay about US$950 million for Singapore Aircraft Leasing Enterprise, Asia's biggest plane-leasing operation, two people with direct knowledge of the plan said on December 15.

The bank beat rivals, including Dubai Aerospace Enterprise and Japan's Mitsubishi Corp, the duo told Bloomberg News, asking not to be identified before an imminent announcement.

Including debt, the acquisition will cost about US$3.5 billion.

China's commercial airline fleet flew 133 million people in the first 10 months of this year and will probably more than triple in size to 3,900 planes in the next two decades, according to Boeing Co.

Leasing aircraft lets airlines expand and replace aging planes quicker with less of their own money.

"In the long run, there must be some sort of aircraft leasing company to serve the country's demand," said Winson Fong, who helps manage about US$2.3 billion of assets at SG Asset Management in Singapore. "Aircraft leasing will grow along with the fleet expansion in China."

Bank of China wants to continue to expand into plane leasing and has an agreement with Royal Bank of Scotland Plc, which holds about 4.4 percent of the Beijing-based company, to develop aircraft finance.

Industrial & Commercial Bank of China Corp has already loaned more than US$8.9 billion to the aviation industry, covering at least 100 aircraft loans and 200 guarantees, according to its Website.

Airlines in the country will buy 2,880 new airplanes by 2025, costing about US$280 billion, Boeing said.

Founded in 1912, Bank of China has been providing guarantees on almost all planes leased by Chinese carriers since the 1980s, according to its Website. Its shares had fallen by 0.5 percent by noon in Hong Kong on December 15.

Singapore Aircraft leases planes to 34 airlines, including Canada's WestJet, China's Shandong Airlines and Kenya Airways and has posted profits every year since it began operations in 1993.

Earnings are rising even as airlines in the Asia-Pacific region, the fastest-growing area for air traffic in the world, struggle with high oil prices.

Singapore Airlines Ltd and German bank WestLB AG, each own 35.5 percent of Singapore Aircraft.