Bloomberg News

Airbus Says French Banks Tap External Funds for Aircraft Finance

April 27, 2012

Airbus SAS said French banks have remained active in aircraft financing by shifting their role toward structuring deals with outside money rather than committing funds themselves.

“The French banks are still there: we shouldn’t write them off completely,” Nigel Taylor, the European planemaker’s head of financing, said in an interview at a conference in Barcelona.

Three of the four major French banks, BNP Paribas SA (BNP), Natexis and Calyon, continue to do “quite a lot of business,” with a mix of financing from their own books and some draws on external funding, Taylor said.

Airbus, the world’s biggest commercial aircraft maker, plans to deliver about a record 570 planes this year up from 534 last year, and already has financing lined up for about 50 percent of the deliveries planned for the second half, Taylor said. Orders that have financing in place involve export credit drawing on state guarantees and sale leaseback arrangements, where airlines buy planes and then sell them to lessors, who lease them to airlines for monthly rental payments.

“There’s still plenty of cash out there,” he said.

French banks have played a key role in aircraft finance globally, contributing between 15 percent to 20 percent of all financing commitments for commercial aircraft.

China Option

Societe Generale (GLE) said in late 2011 it would retreat from aircraft lending.

BNP, Natexis and Calyon have “great teams, they have expertise and can go out and find pockets of money and put it together,” Taylor said.

Though Chinese banks had been touted as an alternative source of financing when French banks showed signs of pulling back, non-Chinese airlines haven’t rushed to that market because financing there is costly, Taylor said.

“Chinese banks are still quite expensive,” he said. “Their funding strategy is totally determined by the central bank, so they’re not really free to go and compete. They’ve been strong in supporting Chinese deliveries but it hasn’t gone much further than that.”

Banks in other parts of the Asia-Pacific region, including Malaysia, Japan and Australia, have raised their profile in aircraft lending, he said.

“The Japanese are going to be a pretty powerful source of funding because they have access to long-term dollars,” Taylor said.

To contact the reporters on this story: Andrea Rothman in Barcelona via aerothman@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net.


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