The 2015 award for “Trade and Export Finance Deal of the Year” from the Global Financial Conferences at Bonds & Loans 2015 Turkey recognized Turkish Airlines for its unique, complex, and innovative financing structure from the European Credit Agency (ECA) Guaranteed Italian Tax Lease. The proceeds were utilized for the purchase of three new A330-300 aircraft delivered in 2015 in a deal worth the equivalent of approximately USD 315 million.
This structure, which was firstglobally implemented by Turkish Airlines and provided by Societe Generale, results in a substantial reduction in the cost of financing by combining tax benefits and an ECA guarantee. It also incorporates a Japanese yen denominated debt repayment reflecting the company’s natural hedging policy to protect against adverse exchange rate movements due to its net long position in Japanese yen.
Furthermore, at the same awards ceremony, Turkish Airlines received the runner-up prize for “International Bond Deal of the Year”. Three new Boeing 777-300ER aircraft were financed in 2015 using Class A bonds with 12-year tenor and USD 328 million nominal valued Enhanced Equipment Trust Certificates (EETC). Turkish Airlines was one of first five non-US airlines to utilize financing from US capital markets. Citibank, Goldman Sachs, Deutche Bank, and BNP Paribas were all involved in the transaction. The issuance has the highest loan-to-value (LTV) ratio ever in the market compared to similar Class A bonds.
The ability to access long-term, low-cost financing arrangements is vital to sustain healthy growth in the highly competitive airline sector. Turkish Airlines has financed USD 12 billion from 2006 to 2015 and its debt structure has a 5-year weighted average maturity with an average interest rate of just 3%.
Turkish Airlines has 215 aircraft worth USD 13 billion on order to be delivered over the next six years. This is one of the largest fleet expansion plans in the world. The company continues to strengthen its financing alternatives by way of diversification and leads the sector with innovative solutions.
Turkish Airlines, Inc.