Tuesday, 13 September 2011

Interview: David Arendt, Cargolux CFO

Cargolux finances three more 747-8Fs, sells one 747-400F

Cargolux has arranged Ex-Im backed funding for three of the four Boeing 747-8Fs due to be delivered in 2012, and the carrier will consider an operating lease structure for the remaining freighter, CFO David Arendt has told Aviation Exchange. The airline is the launch partner for the 747-8F and will sell one of its older 747-400Fs to Silk Way Airways later this month after receiving two of the three Dash-8s being delivered this year, he added.

The fourth aircraft, which arrives in February 2012, will be financed by PEFCO under an Ex-Im guarantee, Arendt confirmed. The fifth aircraft, delivering in April 2012, will be acquired by a joint venture comprising Cargolux and three equity co-investors – Crédit Agricole, DVB Bank and KfW-IPEX Bank – and will draw from Ex-Im backed debt provided by JP Morgan. The sixth, arriving in July 2012, looks set to be funded by an Ex-Im bond on the capital market, with Goldman Sachs and Crédit Agricole signing preliminary agreements.

No plans have been finalised for the seventh aircraft, scheduled to arrive in October 2012, though Arendt said that an operating lease would be the "preferred structure". The CFO declined to name which leasing companies have held talks with Cargolux, though GECAS is known to have recently ordered two 747-8s at the Paris Air Show.

Fleshing out further details on the 2011 Ex-Im plans, which were announced last month, Arendt said that the local banks providing junior loans on aircraft three were Luxembourg's State Savings Bank BCEE and Banque de Luxembourg. He also noted that the funding structure for aircraft one was virtually identical to that of aircraft five. The CFO said it was "too early" to discuss financing arrangements for the three 747-8s delivering in 2013, though he went on to outline retirement plans for some of the carrier's existing aircraft.

"Because the 747-8s were late in coming, we had a capacity gap which we filled on a temporary basis with wet and dry leases," he explained. "These will now be handed back to their respective lessors as the re-fleeting kicks in. So all this leasing capacity will progressively leave our fleet, and be replaced by permanent capacity in the form of 747-8s."

The two 747-400BCFs Cargolux currently has on dry lease from Boeing will be retained until at least next year, with no final decision taken over their contracts, while the 747-200SF on dry lease from Air Atlanta will be allowed to expire in December 2011. Undisclosed additional wet leases will also be terminated according to contract, and the carrier will sell one of its 11 747-400Fs to Azerbaijani cargo carrier Silk Way Airways by the end of this month.

Qatar Airways recently finalised its purchase of a 35% stake in Cargolux, and Arendt said the first board meeting involving its new Qatari representatives will be held this week. "We are very much looking forward to welcoming our new shareholder and putting to work the various synergy plans that we agreed during the negotiations," he concluded.