Lufthansa has diversified its funding approach by securing financing from various sources for its aircraft deliveries, according to Markus Ott, head of corporate finance at Lufthansa, speaking at the Aircraft Finance and Commercial Aviation Conference in Barcelona.
The carrier recently raised €500 million ($660 million) through a German financing instrument called a Schuldschein, which is a loan transaction similar to a bond, as it allows money to be easily transferred from one bank to another.
Banks in Germany, Switzerland, Austria and France all participated in this recent deal, which will contribute to funding the Boeing 747-8 deliveries, Ott confirms.
The German carrier also has raised €234 million in the capital markets through its first Wall Street bond issuance. "If you want to tap the capital markets in the US its very costly paying the lawyers, but its proved a cheap way of financing for Lufthansa nevertheless," Ott says.
Furthermore, the airline closed the first Japanese operating lease (JOL) to fund an Airbus A380 earlier this month, as previously reported on FlightGlobal.
"Some people say you cant do JOLs on widebody aircraft, but weve now proven thats incorrect," Ott says. "There was initially a lot of scepticism about financing an A380 through a JOL, but Lufthansa and Airbus have discovered its a good aircraft to finance in this way, its where we earn the money."
Lufthansa closed four JOLs for A321s and also a French operating lease for an A380 in 2011, Ott says.
Lufthansas head of corporate finance is confident that "we will engage in some kind of tax leasing structures" to help finance the airlines first five 747-8 scheduled to arrive later this year.
Despite its flurry of fundraising, Lufthansa is not under any pressure concerning funding requirements for its expensive upcoming deliveries. "We have access to a cash balance of around €4 billion, so even if we dont engage in any financing transactions we will still have enough money," Ott says.
Source: Commercial Aviation Online