Etihad Airways in Billion Dollar Aircraft Financing Programme

Etihad Airways has signed the first Export Credit Guaranteed transactions in a billion dollar aircraft financing programme for 2009 and 2010.

The recently acquired Export Credit Agency (ECA) rating, which is also endorsed by all Organisation for Economic Co-operation and Development (OECD) countries, effectively places Etihad alongside investment grade airlines.

The sovereign guarantees from the governments of Germany, France, the United Kingdom and the United States of America will further enhance the airline’s existing aircraft financing activities in the commercial markets by providing access to a new source of capital at competitive margins.

James Hogan, chief executive officer of Etihad Airways, said, “Our shareholder gave us a very clear commercial mandate, and we have worked hard over the last three years to establish a robust commercial platform and a strong corporate governance framework. We were able to demonstrate that we have a clear business plan, that we have delivered on that plan, and that we have a credible prospect of ongoing performance and delivery.

“The high ECA rating and OECD support validates our management team and its commitment to our shareholder mandate and its long-term vision for Etihad. It demonstrates the credibility and confidence Etihad now enjoys, and more importantly it recognises our status as a commercial entity on the global stage.”

UK Minister of Trade, Investment and Business, Lord Davies of Abersoch, added, “I am delighted that ECGD has supported the delivery to Etihad of these two Airbus aircraft. Its first export credit agency-backed financing is a significant step for Etihad and I am very pleased that ECGD has played its part in making this happen. This support is a clear demonstration of the government's commitment to support aerospace exports from the UK.”

In the first tranche of the US$ 1 billion programme, which will finance the acquisition of eight aircraft to be delivered by the end of 2010, Etihad has signed agreements worth US$ 233 million to finance the purchase of two Airbus A340-600 aircraft.

In terms of the first agreement, HSBC Bank plc, acting as the mandated lead arranger, lender, facility agent, security trustee and hedge provider, will provide financing valued at US$ 122 million to the airline over a 12-year period.

The second US$ 111 million agreement was signed with Landesbank Baden -Wuerttemberg, which acted as mandated lead arranger, lender, facility agent and security trustee. Debt placement for this deal was undertaken by SkyBlue Capital LLC.

Both the loan facilities are guaranteed by the Export Credits Guarantee Department of the United Kingdom with re-insurance provided by Compagnie Francaise d’Assurance pour le Commerce Exterieur of France and EULER HERMES Kreditversicherungs AG of Germany.

Peter Luketa, global head of export finance at HSBC, said, “ECA financing is coming into its own in the Middle East as a vehicle for financing the continued growth of the region, and as one of the world's leading providers of Export Finance, HSBC is able to deliver the right solution to its clients in the Middle East We are delighted to have had the opportunity to arrange this first ever ECA facility for a client as important as Etihad.”

The Etihad fleet presently comprises 47 aircraft and will expand to 52 by the end of the year. In 2010, the airline will take delivery of an additional four aircraft bringing the total fleet to 56 aircraft.

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