Airbus Group NV (AIR) plans to create an in-house bank by taking over a regional lender as the world’s second-largest planemaker follows companies from Daimler AG to Siemens AG in providing financial services for customers.
Airbus will purchase Salzburg Muenchen Bank from the Raiffeisenverband Salzburg cooperative for an undisclosed sum, the Toulouse, France-based manufacturer said in a statement today. The planemaker is seeking to close the deal “as early as possible” this year, pending German regulatory approvals.
Airbus, which has an order book of more than 5,500 aircraft, joins other industrial companies including its engine supplier General Electric Co. (GE:US) in having a banking affiliate to aid customer purchases. Some airlines struggled to raise funding in recent years as bank lending contracted in the wake of the financial crisis that began in 2008.
“In the coming years the whole group can benefit through increased financing flexibility,” Chief Financial Officer Harald Wilhelm said. “Salzburg Muenchen Bank provides us with a good platform to launch our company bank project.”
A banking license would hand Airbus direct access to European Central Bank money supply. The company, previously called European Aeronautic, Defence & Space Co., had explored the project of setting up a bank for more than a year.
“The main purpose is to increase finance flexibility, facilitate financing of non-controlled joint ventures and offer attractive conditions based on the Airbus Group rating,” the company said. The company is rated A2 by Moody’s Investors Service and the equivalent A by Standard & Poor’s, the sixth-highest investment-grade rating on a 10-step scale.
The new organization will be renamed Airbus Group Bank, and Airbus said it will gradually serve all units, which include the helicopter and defense subsidiaries. Airbus added that while it will gain the capability to tap ECB funds, it has “no need” to do so.
Airbus has deepened ties with financial institutions as it seeks to insulate itself from imbalances between the dollar, in which commercial jet purchases are principally denominated, and the euro, its primary cost base. The planemaker has sought more sales in euros to cut back on hedging contracts that protect revenue when translated back into its home currency.
The company opted to buy Salzburg Muenchen Bank, which has about 350 million euros ($478 million) in total assets and 50 employees, because it is “a conservative and well-managed existing banking platform,” the company said.
Shares in the company rose as much as 1.3 percent and were trading 0.65 cents higher at 52.78 euros as of 11:17 a.m. in Paris, valuing Airbus at 41 billion euros.
The banking arm could also provide Airbus flexibility in aiding suppliers, some of whom have struggled to finance investments needed to keep pace as the planemaker increases output to record levels. Airbus acquired Germany’s PFW Aerospace in 2011 to keep the parts-maker in business.
Financing to suppliers would be “limited,” the company said.
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