Norwegian Air Shuttle Recently Financed Five Aircraft Through Private Placement

The recent private placement of five Boeing 737-800 airliners with Norwegian Air Shuttle (NAS) has Boeing bullish on the future of such "boutique" financing.

The deal with NAS was funded by an unnamed U.S. insurance company which paid for the aircraft through Aviation Finance Co. Ltd, described as a boutique investment group. Aviation Finance facilitated the borrowing by the insurance company to fund the aircraft, reportedly worth $450 million at list prices.

Boeing said such funding could be worth several billion dollars per year.  Kostya Zolotusky, managing director of Boeing Capital Corp., told Bloomberg Business Week that there are many more airlines looking to do two- to five-plane deals that are not as attractive to traditional financiers. Large purchases are often funded through Enhanced Equipment Trust Certificates (EETC) ... generally worth a billion dollars or more, Zolotusky said. They require values above $600 million, which means only about 10-20 airlines outside the U.S. can take advantage of them.

Boeing expects that more than 33,000 commercial aircraft will be ordered over the next 20 years, but few will be in large lots that would attract EETC financing. Analysts expect that EETC and private placements will grow to about 22 percent of the anticipated financing this year alone, up from 14 percent last year.

FMI: www.boeing.com