The good, the bad and the ugly: the shape of things to ... - AviTrader

Leasing News
Aircraft and engine finance
Financing future fleets
THE RECORD ORDERS FOR AIRCRAFT AND ENGINES that
came out of the major industry shows this year, as well as massive
commitments such as Lion Air’s $21.7bn order for 230 Boeing
737 Max and NG jets late last month, leave us with at least two
certainties: Airbus and Boeing will continue to keep their production
rates high and growing throughout 2012 and beyond - and
that these new orders must be paid for somehow.
And therein lies a niggling doubt: Europe’s biggest banks have
been traditional sources of finance for eager buyers, but the stillunresolved
Eurozone sovereign debt crisis, coupled with the Basel
3 standards on capital exposure agreed by the world’s banking establishment
a year ago, mean many airlines and operatorswill have
to look elsewhere.
US airframer Boeing recently said that it expected the global value
of aircraft deliveries in 2012 to top $95bn, rising to $106bn in
2013, up from $77bn this year.
Kostya Zolotusky, managing director at Boeing Capital, the airframer’s
financing arm, said earlier this month that he did not foresee a
funding shortfall in 2012. Capital markets should provide funds of
up to $10bn next year for aircraft purchases - more than double
the $4bn they put up in 2011, he said, accounting for 10% of total
funding. Export credit agency financing, from institutions like the
US Export-Import Bank, should remain steady at 30%, while com-
LATEST LEASING NEWS
Willis Lease Finance closes new and
expanded revolving credit facility for
$345m
Willis Lease Finance Corporation closed a new revolving
credit facility. The $345m credit facility, with
an interest rate equal to LIBOR plus 2.75%, is available
to Willis Lease on a revolving basis for five years
through November 2016. The credit facility is provided
by a syndicate of banks led by Union Bank, N.A.,
as Administrative Agent, Joint Lead Arranger and Sole
Bookrunner, Wells Fargo Bank, National Association
as Syndication Agent, Wells Fargo Securities, LLC as
Joint Lead Arranger, and U.S. Bank, N.A., as Documentation
Agent and Joint Lead Arranger. This credit facility
and other credit facilities support the company and
its subsidiaries in financing its lease portfolio which
stood at $961m as of September 30, 2011.
Jackson Square Aviation closes $265m
credit facility
Jackson Square Aviation (JSA) closed a $265m
secured credit facility, which provides the company
with committed long-term debt capacity. This
facility provides JSA with a vital financing source to
acquire modern, fuel-efficient aircraft for lease to
its airline customers. JSA will finance eight aircraft
currently owned or in its committed pipeline, for
delivery through 2012. The facility is structured and
arranged by Crédit Agricole (the Arranger) and fully
underwritten by the Arranger and Siemens Financial.
This transaction brings JSA’s total committed credit
facility capacity to approximately $900m.
ALC announces proposed offering of
$300m of convertible senior notes
Air Lease Corporation intends to offer $300m aggregate
principal amount of convertible senior notes
due 2018 in an offering exempt from registration under
the Securities Act of 1933, as amended the “Securities
Act”). In connection with this offering, the
Company expects to grant the initial purchasers of
the Notes an option to purchase up to an additional
$45m aggregate principal amount of the Notes. The
Notes will be offered only to qualified institutional
buyers in reliance upon Rule 144A under the Securities
Act. The Notes will pay interest semi-annually
and will be convertible at the option of the holder
into shares of the Company’s Class A common stock.
The Notes will mature on December 1, 2018, unless
earlier repurchased or converted.
DVB Group reports operating performance
during third quarter of 2011
For the third quarter 2011, DVB reported a 21.2%
increase in net interest income after allowance for
credit losses, of €162.1m. At €106.4m, consolidated
mercial bank lending will dip to 21% from
25% this year. Zolotusky expects a quarter
of deliveries will be funded in cash both this
year ($19bn) and next ($24bn).
Some analysts have suggested that aircraft
financing will be significantly more
challenging in years to come, and indeed,
that some airlines could struggle to secure
financing for their mega-orders next year
and beyond.
Kostya Zolotusky
Boeing
But Zolotusky said he was confident that aircraft orders in 2012
would be secure, as airlines seek different sources of financing and
make greater use of leasing companies.
Echoing Boeing’s bullishness, Charles Willis, president and CEO
of Willis Lease, told AviTrader MRO that he believed there will be
additional funding available for all types of companies seeking finance
for aircraft, engines and spares - from Export Credit Agencies
(ECAs), equity / mezzanine fund providers and lessors - including
his own company. Only last month, Willis closed a new $345m
credit facility with a syndicate of US banks to support the financing
of its lease portfolio, which stood at $961m at September 30th.
“I am sure there will be many more of these types of credit agreements
to come,” he added.
net income before taxes decreased by 10.7% year-onyear,
primarily due to volatile net income from financial
instruments in accordance with IAS 39. Total income
(comprising net interest income after allowance for
credit losses, net fee and commission income, net income
from financial instruments in accordance with
IAS 39, results from investments in companies accounted
for using the equity method, and net other
operating income/expenses) declined by 1.8%, from
€241.6m to €237.3m. Net interest income rose by
23.7% year-on-year, to €181.3m, and net interest income
after allowance for credit losses was up 21.2%,
from €133.8m to €162.1m. New Transport Finance
business totalled 109 transactions as at 30 September
2011, with an aggregate volume of €3.3bn (9m
2010: 93 transactions with a volume of €3.0bn).
SAS secures finance lease facility of SEK
500m for four existing A321s
SAS secured a five-year refinancing of four Airbus
321 to a total value of approximately $74m
(SEK500m). Nordea is the Agent and Deutsche
VerkehrsBank AG (DVB) is the Security Trustee in the
transaction. The transaction is part of SAS ongoing
aircraft refinancing program where loans maturing
in 2011/ 2012 are to be renewed. The financing of
two aircraft will close in Q4 and the remaining will
close in Q3 2012 and Q4 2012, respectively.
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AviTrader MRO - December 2011