China Eastern Airlines successfully closed an aircraft financing deal for one A320-200 under a French Lease combined with ECA debt structure. Credit Agricole – Corporate and Investment Bank (CA-CIB) and CIC acted as mandated lead arrangers. CA-CIB also acted as facility agent and security trustee in the ECA debt. The financed aircraft was the first ever Tianjin (PRC)-assembled Airbus aircraft to be covered by the European ECAs.
We are likely to see far more ECA and Ex-Im action in 2012 and could also see far more investment in aircraft in a double EETC fashion or the like….this is both a worrying and exciting time to be plotting the course of aviation financing. Look to Airline Economics November/December issue to gain an insight into the current woes of the financing market and then look to the January issue for the 2012 outlook and forecast brought to you with insight from the very top. We are also producing a special issue for subscribers right now that will act as a forward to the January issue with information from the people at the top who are keeping the transportation finance market moving.
Meanwhile as the premium market continues to shrink two start-ups within the APAC region obviously think the time is right to move into premium seating….
AirAsia’s Tony Fernandes clearly is either mad as a hatter or just does not care about the premium seating stats coming out of every airline at the moment. He is launching a new premium airline, called Caterham Jet, to compete with Emirates, Cathay Pacific, Thai Airways and Singapore Airlines aimed at high-flying executives traveling in Asia. The regional airline will initially fly a Bombardier CRJ700, serving Bangkok, Jakarta and Singapore from Subang Airport outside Kuala Lumpur. However, Caterham Jet is still waiting for its operating license from the Malaysian government.
There is method to this plan though as a premium regional operation just might work. He will of course be hoping that HSBC and the like move back to Hong Kong.
Then there is RedQ the Qantas offering which is aimed at the ultra-premium market which is more or less the exact same idea with a different base of operations.
The top prize for having a rose-tinted outlook though goes to Hong Kong Airlines, which is due to release pricing structures next week for a new all-premium class service between London Gatwick and Hong Kong. Hong Kong Airlines plans daily flights with a dedicated fleet of three new Airbus A330-200s with an all business class seating configuration in two classes - Club Premier and Club Classic. The service is due to operate from Gatwick’s North Terminal from March 8, 2012.
You may recall that Hong Kong Airlines was established in 2006 with a route network covering 25 cities in Asia and Europe with a fleet of A330s and Boeing 737-800s. So why would an airline such as this risk so much on something that has been tried and failed before? This does seem like an awful risk to be taking at this moment and it may spell doom for the balance sheet of Hong Kong Airlines – then again if they do well then we will all have to take note and look at our sources of information with care – Keep an eye on this operation.
Long-haul business travel, especially internal banking transits, has fallen very sharply over the past three months and looks set to continue this trend for an uncertain duration.
While we are on the subject of APAC business, we should continue to note the worrying signs of economic strife within China and India. The continuing collapse of the housing market in both countries is taking a terrible toll. In China this is adding to the banking system and private sector problems which we first highlighted in September 2010. China is cash rich but its fortunes are tied to export markets that are constricting at pace and there remains nothing to stop a newly-created middle class person slipping into poverty within a very short period of time – this we are seeing gathering pace. Is China able to withstand a US-style housing collapse? The answer is no internally but to other countries which have a limited Chinese import market, the impact will be felt by and limited to investors and, yes you guessed it, airlines and aviation manufacturing companies. Do not underestimate the problems that China has and the fact that the autocratic nature of government, its greatest asset, is weakening.