Airbus and EADS seek to reassure investors as rumours circulate of French banks reviewing aviation finance units

By Victoria September 23, 2011 07:15

Airbus and EADS seek to reassure investors as rumours circulate of French banks reviewing aviation finance units

Airbus parent company, European Aeronautic, Defence & Space (EADS) has sought to reassure investors that lenders and leasing companies aren’t retreating from the aircraft financing market. CFO Hans Peter Ring, reported in Reuters, says that “many new banks [are] entering or re-entering the aviation market, calling it a “very positive signal” and that aviation financing is secured funding and therefore “remains attractive business to lenders”.

The statement was prompted by the news that two French banks – BNP Paribas and Société Générale – are reported to be reviewing their project financing units, including aviation, and are implementing restructuring plans to reduce their balance sheets and cut back on their need for US dollars. The news has led many to infer the firms will be pulling out of aircraft financing altogether, however BNP Paribas has stated firmly to Airline Economics this morning: “We are not pulling out of aircraft financing”.

In an interview with French newspaper, Les Echos, BNP Paribas CEO Baudouin Prot has stated, talking about aviation finance and other businesses: “We will not give up on expertise accumulated over the past decades”.

Equally, Frederic Oudea, CEO of Société Générale, was quoted in Le Figaro that the bank does not need to be recapitalized and its liquidity is under control. He said: “When it comes to the dollar, central banks have provided a strong answer. And as regards the euro, liquidity remains abundant.” But he added: “The place taken by central banks in the circuit shouldn’t be permanent. The normal functioning of financial flows must be reestablished, which presupposes that the psychological contagion effect that operates today must be broken and that confidence in Europe from the rest of the world must be restored.”

The Eurozone crisis has led to US money market funds pulling out of investing in Eurozone countries, including France, severely restricting access to dollars, which all aircraft are priced in. Other notable aviation finance banks in France are Credit Agricole-Corporate Investment Bank and Natixis Transport Finance, which remain absolutely dedicated to aviation financing. CA-CIB is fully funded for the rest of the year and is in a good position for both rail and aviation financing. However, all Eurozone banks are feeling the squeeze on dollar funding, which is leading to the inability for certaiin banks to offer funding for new clients, echoing the state of play when the global financial crisis hit in 2008.

Speaking at the ISTAT conference in Barcelona on Tuesday, Christian McCormick, chief executive office of Natixis Transport Finance, stated firmly that the French banks were not gone from aircraft financing: “Don’t put us down we [French banks] are going to be here next year; Natixis will be here, BNP, CA-CIB and Société Générale we are hoping. We will find solutions; we are not giving up but we are counting on the industry to help us find the funding… Today we don’t have so much short-term money because we are not being given that short-term liquidity, but if it comes back to us, we hope to be able to resume the transformation process and turn that short-term money into long-term money. The best way to make sure we are here next year is to place your funds, your treasuries with us and we will return that to you with long term loans.”

McCormick also stated that French banks were not the only aviation finance houses out there: “There are many German banks in aircraft financing and they are not facing the liquidity crises that we are facing, so this is a great opportunity for them, next year perhaps, to step in,” he said.

Although the European Central Bank has announced plans to coordinate with the US Federal Reserve, Bank of England, Bank of Japan and Swiss National Bank to ensure European banks unlimited dollar funding through the end of the year, it is unlikely to be sufficient for French banks seeking to fund aircraft purchases with long lead times.

Airbus chief operating officer John Leahy has stated that the manufacturer remains committed to providing financing for customers where required but funds are limited. With more than $72 billion worth of aircraft due for delivery in 2012, airframe manufacturers, export credit agencies and non-EU banks can only finance a proportion of such a high number, and the $42 billion of that figure usually financed through commercial banks, will need to find another source of funding.

The capital markets are a little-tapped resource for many airlines, mainly as most are not rated. However given the current economic environment, it is well worth airlines and lessors preparing to access this source of funding by getting rated and by gaining an understanding about how these markets work and also meeting investors to explain first-hand why the aviation market is such a good buy. Airline Economics is hosting the first series of Aerospace Investment Conferences in London, Miami and Hong Kong, where you can do just that. For more information visit or email

By Victoria September 23, 2011 07:15
No Comments Yet!

Let me tell You a sad story ! There are no comments yet, but You can be first one to comment this article.

Write a comment

Only <a href=""> registered </a> users can comment.