$114 million Export Credit Agency facility to finance acquisition of Airbus aircraft.
Citi has announced the closing of an agreement with Vietnam Airlines to provide financing for the purchase of two Airbus A321s.
An Export Credit Agency (ECA) facility of $114 million has been arranged with the support of European ECAs and fronted by Euler Hermes, the German ECA, to pay for the two A321-200 aircraft delivered last November and December.
The facility benefits from a sovereign guarantee from the Ministry of Finance, meaning cost savings through the Cape Town Convention Discount. Citi acted as Mandated Lead Arranger for the ECA-guaranteed loan.
“This finance package will enable Vietnam Airlines to accomplish its fleet renewal and expansion plans, which aim at enhancing our operating efficiency on both domestic and international routes,” said Mr. Pham Ngoc Minh, President and CEO of Vietnam Airlines. “This is in alignment with Vietnam Airlines’ strategic focus on short-haul and medium-haul expansion using our A321 fleet. We strongly believe that this credit facility will enhance our long-lasting partnership and enable us to complete the realization of our development strategy, becoming one of the Asia’s carriers of choice by 2020.”
“It is our privilege to be the ECA Arranger for Vietnam Airlines to purchase the very first to the very final A321 aircraft in a series of 26 A321s it has contracted to buy from Airbus in the 2011-2015 period,” said Ms. Natasha Ansell, Managing Director of Citi’s Vietnam office.
"This transaction marks the fifth ECA-guaranteed loan facility Citi has arranged for Vietnam Airlines since 2003. This important transaction will support the company’s expansion and increase the capacity of Vietnam Airlines’ fleet to better meet the passenger and cargo demand. As always, Citi remains committed to bringing into the country our 200 years of expertise, our unrivalled global platform of technology and innovation, and the broadest spectrum of products and services to better serve such a valued client as Vietnam Airlines.”
As a major part of the Vietnam Airlines fleet, the A321 family is the most suitable and effective type given its state-of-the-art technology, which helps the airline not only cut maintenance costs and noise emissions but also save fuel. Vietnam Airlines signed the contracts with Airbus in 2007 and 2009 to purchase a total of 26 Airbus A321-231s for delivery during 2011-2015, in line with the plan to expand its fleet to 122 aircraft by 2020.
Vietnam Airlines has been successful in sustaining high load factors over the years. Throughout its development process, Citi has had a long-standing and multi-faceted relationship with Vietnam Airlines, including being the sole arranger for its first US Ex-Im Bank-backed financing for Boeing aircraft in 2003. The new deal further highlights the strength of Citi’s relationship with Vietnam Airlines as it continues to develop further with its ambition of becoming one of the leading carriers in the region.