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Commercial aircraft's operated by airlines, use more sophisticated leases and debt financing schemes.
Three most common schemes for financing commercial aircraft are secured lending, operating leasing & finance leasing.
However, there are other ways to pay for the aircraft.
Cash
Operating leasing and sale/leasebacks
Bank loans/finance leases
Export credit guaranteed loans
Tax leases
Manufacturer supportComment
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Hilton HHonors Partners SriLankan Airlines
Hilton HHonors has partnered SriLankan Airlines’ frequent flyer program, FlySmiLes.
Under the partnership, members of both programs can now earn Hilton HHonors points & FlySmiLes miles.
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They have all built in interest rates which is directly proportional to the credit rating of the company.
For example EK borrows at a very low interest rate (I think less than 1%) whereas UL borrow at 4% + (I think that the rate last time they borrowed from Mashreq bank)
UL cannot go after commercial loans that why they are going after shareholder (GOSL) for the capital injection
No one gives free moneyComment
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You're statement is meaningless without giving a tenor or if the funding is secured or not. On an unsecured basis, EK at a group/corporate level borrows at around 3% for 5year money. On a secured aircraft financing basis it's less.
UL is most likely leasing its planes and that should also come with a 'wrapping' from a European export credit agency which in effect would make the financing risk free. So it will not be directly proportionate to ULs standalone credit strength but be assessed on a transaction by transaction basis. Aircraft are rarely financed at a company leave and very few airlines buy their planes, they lease them.
The loan from Mashreq was a corporate facility for 3years with a treasury guarantee and secured through ULs USD receivables. Mashreq got an amazing deal, the stupid government didn't open the transaction up for competition therefore the bank dictated the terms. Someone somewhere made a cut so it ended up being a transaction withouth tenders and competition from other suppliers, typical way to do business in SL.Comment
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Yes we are talking about secured aircraft financing that is very low for EK. and as per your assessment EK corporate unsecured loan (3year) is higher than UL's SECURED (3year) loan.
Export Credit:
asset and lending risk assessment is done before Export Credit finance rate is approved.
(Page 14)
For every airline interest rate differs; right now question is if UL can afford (in your term lease) the planes. It even cannot settle CPC bills on timeComment
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Btw Any news about Cinnamon air fleet?Comment
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Airbus orders that have financing in place involve export credit drawing on state guarantees and sale leaseback arrangements, where airlines buy planes and then sell them to lessors, who lease them to airlines for monthly rental payments.Yes we are talking about secured aircraft financing that is very low for EK. and as per your assessment EK corporate unsecured loan (3year) is higher than UL's SECURED (3year) loan.
Export Credit:
asset and lending risk assessment is done before Export Credit finance rate is approved.
(Page 14)
For every airline interest rate differs; right now question is if UL can afford (in your term lease) the planes. It even cannot settle CPC bills on timeComment
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SriLankan Airlines has signed an agreement to purchase 10 new airbuses, last Friday
SriLankan Airlines has signed an agreement to purchase 10 new airbuses which would be added to the present fleet within the next two years. The purchase agreement had been signed by SriLankan Chairman Nishantha Wickremasinghe and Airbus Industries in Colombo last Friday.
http://www.dailynews.lk/2013/05/20/bus01.aspComment
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