2. Sources of Finances
Short Term Finances
Long Term Finances
Lease
Long term finance
Types of Lease
Operating lease
Financial lease
3. Aircraft Financing
Environment
3
Satisfactory Cautionary Major ConcernG Y R ChangeY/G
Capital Providers 2003 2004 2005 2006 2007 2008
1Q
Lessors R/Y Y G G G G
Commercial Banks R/Y G G G G G/Y
Public Debt / Capital
Markets
R R R/Y Y G/Y/G G/Y
Export Credit Agencies G G G G G G
Private Equity / Hedge
Funds
G G G G G G/Y
Tax Equity R R Y Y G G
Airframe and Engine
Manufacturers
R R/Y G G G G
New Sources of Funding G G
4. s leasede fleet id airlin
World Airline Fleet: 1970 to 2008
1970
3,811 Aircraft
1980
6,397 Aircraft
1990
9,775 Aircraft
57 Leased
(1.5%)
2000
15,859 Aircraft
2008
21,375 Aircraft
% of worl
208 Leased
(3%)
1,658 Leased
(17%)
3,826 Leased
(24%)
6,628 Leased
(31%)
Airclaims through 06/14/08
31% of world airline fleet is leased31
Operating Leases Are Playing a Larger Role
4
6. World Lessor Fleet
6
BOC
BCC
Macquarie
BBAM
AerCap
RBS
Other (123
lessors)
ILFC
CIT
GECAS
ACG AWAS/
Macquarie
BBAM
AerCap
RBS
ACG
AWAS/
Pegasus
BOC
BCC
Other (123
lessors)
ILFC
GECAS
CIT
$160B value
33% of World’s Fleet Value
Source: Airclaims Jun ‘08. Includes all in-service/stored western built jets operated by airlines and managed by operating lessors. Generic Market Value as of Dec ‘07
6,628-units
Pegasus
7. Traditional leasing companies
7
Ownership by large parent company and diversified
product base
Well-known in market place
Usually large and varied portfolio
Multiple funding sources within and outside company
Parent companies ma e exp d to other risk factorsosey bParent companies may be exposed to other risk factors
8. Banks
8
Combination of new and existing entrants to the market
Invest in aircraft portfolio for diversification and
opportunity
Conservative in deal structure
Some regional focus
Close y monitoring the econom c environmentilClosely monitoring the economic environment
9. Typical Direct Loan Structure
9
Lender ManufacturerAirline
Guarantee
Guarantor
(Optional)
Loan 70 - 85%
Mortgage as
Security
Purchase Price
Title to Aircraft
15 to 30% Balance of Funds
Same Lender (if 100% Financed)
Subordinated Lender
Equity Investor
Airline
10. Finance Leases Offer Greater
Protection to Lenders Than a
Direct Secured Loan
Off-shore Special
Purpose Corporation
(SPC) owns the asset
SPC can be owned by
the airline, the lenders,
or a charitable trust
If not owned by lenders,
pledge of shares of SPC
and a first mortgage is
granted to lenders
Ownership of aircraft
transfer to airline at
maturity
10
Direct Loan or
Finance Lease?
11. Typical Finance Lease
Structure
11
Lender ManufacturerLessor
Guarantor
(Optional)
Airline
(Lessee)
Loan 70 - 85%
Mortgage/pledge
as Security
Lease
Guarantee
Purchase Price
Title to Aircraft
15 to 30% Balance of Funds
Same Lender (if 100% Finance)
Subordinated Lender
Equity Investor
Airline Downpayments
12. Loan guarantees for up to the lesser of 85% of net price
or U.S. content
12-year repayment term, fixed or floating interest rate
Structured as a cross-border finance lease
Security requirements may include sovereign guarantee
Interest rate based on market conditions
Minimum exposure fee of 3%, can be financed over the term
All Export Credit agencies are governed by Aircraft Sector
Understanding (ASU) agreements to maintain equal terms
and conditions
Export-Import Bank of the
United States
12
13. Ex-Im Bank Finance Lease
Structure
13
Aircraft PriceAircraft Title
85% Guaranteed Loan
Loan Payments
15% Cash
Payment or
Sub Debt
Guarantee
Boeing
Lender
Ex-Im Bank
SPC
Airline
Guarantor
(Optional)
Guarantee
Lease RentalsFinance Lease
14. Ex-Im Bank is a Significant Financier of
Boeing Aircraft
0%
10%
20%
30%
40%
50%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008E
Ex-Im % of Boeing Exports Ex-Im % of Boeing Deliveries
80% of backlog s E m eligiblex-Ii80% of backlog is Ex-Im eligible
14
15. Evolving Global A/C Finance
Infrastructure
15
Cape Town Treaty
Environmental
Regulation
OECD
European
Aviation
Safety
Agency
EUROCONTROLIASB
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