Lufthansa closes €542m in financings at ‘very favourable’ terms

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Lufthansa Group padded its balance sheet with €542 million ($701 million) in new financing transactions, which closed at "very favourable' terms in 2012.

The group says in its annual report the financings included a Japanese operating lease (JOL) covering an Airbus A380, another JOL structure for a Boeing 747-8 as well as a French lease deal for a 747-8.

During the year, the group took delivery of 44 aircraft including four 747-8s, two Airbus A380s, six A330s, six A321s, nine A320s, five A319s, two 767s, nine Embraer 195s and one ATR 72 aircraft. Lufthansa says the two A380s were used as collateral last year.

During the year, the group tapped the bond market for a total volume of €295 million. In February 2012, Lufthansa issued €50 million worth of notes with a five-year term. The group returned to market in June as part of a €245 million deal with five-year, seven-year and 10-year tranches.

Lufthansa, through Lufthansa Malta Blues, also issued a €234.4 million convertible bond in April, which has a five-year maturity. The bond pays an annual coupon of 0.75% and can be redeemed by a specified number of shares in JetBlue Airways. A total of 46.7 million, or the equivalent of Lufthansa Group's equity interest in the US carrier's shares, are subject to conversion rights under this bond.

In November 2012, Lufthansa Group tapped the capital markets with its re-launched its Euro Medium Term Note (EMTN) programme.

Lufthansa also changed its policy on bilateral lines of credit in the fourth quarter of last year.

The group had €1.7 billion in unused bilateral lines of credit with a "large" number of banks at the end of the financial year. These bilateral credit lines were traditionally granted to Lufthansa for a period of one year and renewed annually. In the fourth quarter, the group changed its policy to renew them, when expiring, for a period of two years and for a lesser amount.

By the end of the financial year, the aim is to have a volume of €600 million to €700 million in bilateral, two-year lines of credit, says Lufthansa. "This change is intended to give the Lufthansa Group a smaller, but thanks to the longer duration, much more stable volume of credit lines as an additional liquidity reserve."