Virgin Blue appoints ING to find $589m
A Bloomberg and Herald Sun report says that Virgin Blue has appointed Dutch-owned banking group ING to source a $589 million loan for new aircraft.
The Brisbane-based carrier last night confirmed the appointment of ING as the lead arranger for the 12-year loan which will be used to fund the acquisition of two Boeing 737-800s and up to 20 Brazilian-built Embraer short-haul commuter jets.
The airline is due to take delivery next month of the first of its Embraers, which will replace the carrier’s much larger 737s on flights to regional centres.
Virgin Blue has opted for the cheaper option of buying rather than acquiring the aircraft on long-term operating leases. Aviation industry officials said last night that the current shortage of new aircraft had driven lease prices to record highs.
Virgin Blue chief executive Brett Godfrey negotiated a favourable long-term supply arrangement with Boeing in 2001 when aircraft prices slumped as a result of international terrorism.
A spokesman for Virgin Blue confirmed the new Boeings would be acquired at prices pegged in 2001. But Virgin is seeking the loan when lenders and investors have cut back on providing debt financing.
The US Federal Reserve, the European Central Bank, the Reserve Bank of Australia and other central banks injected about $US300 billion ($A358 billion) into their financial systems last week to avert a credit crunch.
“It is difficult to get any debt done at the moment,” said Stuart Gray, of Aberdeen Asset Management in Sydney. “Companies will have to pay a much higher spread.”
Last February, Mr Godfrey disclosed that the airline also had ordered seven Boeing 777-300ER aircraft, worth $US2.6 billion at list prices, for its new long-haul offshoot VAustralia.
VAustralia is awaiting US Government approval to begin flights between Australia and the west coast of the US next year.
Virgin Blue shares closed 4 higher at $2.16.
Report by The Mole
John Alwyn-Jones
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