In aviation financing, using a pool of aircraft as
collateral and not individual assets is common, in order for
the airline to have the flexibility of different tranches and
associated interest rates. But relying on a regular
substitution of collateral is a first.
Australia’s Qantas has become the first airline
in the Asia-Pacific as well as globally to rely on this new
feature for its latest loan, an eight-year A$350 million ($270
million) facility part of a wider programme.
The structure is regularly tested so whenever an aircraft is
added or removed, this results in pricing and collateral
adjustments, said Shukor Yusof, founder at aviation advisory
firm Endau Analytics.
Airlines typically use a combination of equity and debt to
finance their activity, with a preference for equity. In a
typical scenario, 50 to 80% of the funding is raised as