El Al Takes Boeing Loan For New Planes


elalEl Al Israel Airlines Ltd. ┬áhas taken a $40 million loan from Boeing Company’s financing arm, Boeing Capital Corporation, to finance the purchase of one Boeing 787 Dreamliner or two lease two 787s. $30 million of the loan will be transferred in July and the rest in July 2014.

The loan is for eight years from July 2012, and bears LIBOR plus a margin, which El Al did not disclose. El Al will repay the loan in monthly installments, but will only pay the interest for the first two years. El Al gave Boeing Capital a lien on a Boeing 777-200 ER passenger plane, bought in 2002, as collateral.

El Al will also forego the right to convert the purchase of two new Boeing 737-900 ER jets to an option to acquire a 787.

El Al stated that the purchase of additional planes, due for delivery between October 2015 and February 2016, in addition to the four planes due to enter service between October 2013 and March 2015, is intended to meet the airline’s commercial needs, and in line with the plan to replace wide-bodied planes with narrow-body planes, and to renew the fleet and lower the average age of its planes.

The estimated price of the purchase of six Boeing 737-900 ER’s is $300-320 million.

El Al’s share price was unchanged at NIS 0.47 in early trading on the TASE today, giving a market cap of NIS 232 million.

{Globes/Matzav.com Israel}