The award for “Trade and Export Finance Deal of the Year 2015” by Global Financial Conferences at Bonds & Loans 2015 Turkey recognized the airline for a 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 brand new A330-300 aircraft delivered in 2015 a deal worth the equivalent of approximately USD 315 million in total
This structure, that was first implemented by Turkish Airlines globally and provided by Societe Generale, results in a substantial reduction in the cost of financing via combining tax benefits and an ECA guarantee. It also incorporates a Japanese Yen denominated debt repayment reflecting the company’s natural hedging policy for protection against adverse exchange rate movements due to its net long position in Japanese Yen currency.
Furthermore, at the same awards ceremony Turkish Airlines received the runner-up prize in the category of “International Bond Deal of the Year”. Three new Boeing 777-300ER aircraft were financed in 2015 using “A” credit noted 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 in the 2006-2015 period and its debt structure has a 5-year weighted average maturity with an average interest rate of just 3%.
Turkish Airlines has of 215 aircraft on order to be delivered over the next six years worth USD 13 billion. 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.
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