Republic finances E-175s with BNDES debt

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Republic Airways has financed the 47 Embraer 175s that it will fly under contract for American Airlines with debt from the Brazilian development bank BNDES.

The Indianapolis-based regional carrier will spend $83 million on the aircraft this year with the balance financed by the export credit agency, says Joe Allman, vice-president of financial planning and analysis, and treasurer of Republic, during an earnings call today.

The debt has a 12-year tenor with a full payout, says BNDES.

The list price of the E-175s is about $2 billion, or about $4 billion including 47 options.

AMR-owned American and Republic announced the eight-year capacity purchase agreement for the E-175s in January. The bankruptcy court approved the deal in March.

BNDES provided financing for AMR subsidiary American Eagle Airlines' existing fleet of Embraer ERJ-135, ERJ-140 and ERJ-145s. The bank agreed to new terms that reduced the carrier's outstanding debt by 38% to $1.08 billion and included the return of the ERJ-135s and some of the ERJ-140s in October 2012.

Separately, Republic reported that capital expenditure was about $7 million in the first quarter but Allman says that this will increase as a result of the E-175 order during the remaining three quarters of the year.