British Airways issues second EETC; AirAsia enters digital payments arena

Eleanor Steed
By Eleanor Steed March 16, 2018 17:12

British Airways issues second EETC; AirAsia enters digital payments arena

British Airways (BA) has launched its second enhanced equipment trust certificate (EETC) transaction, which also incorporates Japanese Operating Lease with Call Option (JOLCO) tax equity.

The $608.74million EETC is offered in two tranches: $409.783 million class AA certificates with an initial loan-to-value (LTV) of 48.6%, which have been rated AA- by Fitch Ratings, and $198.957 million class A certificates with an initial LTV of 49.2%, rated A- by Fitch. Both tranches have a 13.5-year tenor and a weighted average life of 7.4 years. Both tranches will fully amortise and will not feature a balloon payment.

According to Fitch Ratings, the JOLCOs contain early buy-out options at 10 years for the A320neos and 12 years for the 787s. If exercised by BA, the notes will either be redeemed or the JOLCO will be replaced with a finance lease. The structure benefits from an 18-month liquidity facility, provided by National Australia Bank, which is also acting as the depositary bank.

Proceeds from the sale of the notes and the JOLCOs investors will be used to purchase ten new aircraft – seven A320neos, one 787-8 and two 787-9s – and refinance one 787-8 that has already been delivered in September 2017. The new aircraft are scheduled for delivery between March 2018 and October 2018.

The health of the EETC market as well as the strong credit and robust portfolio, this deal is expected to be priced much lower than the 4.85% weighted average coupon of BA’s 2013 transaction.

AirAsia has entered the digital payments pace with the official launch of its own mobile waller, BigPay. BigPay can store up to 10 credit and debit cards, and in partnership with MasterCard, AirAsia can offer its own top-up cash card that can be used for payments and withdrawals worldwide.

Announcing the wallet at the Money2020 conference in Singapore, AirAsia founder and CEO Tony Fernandes, said that BigPay was only the first step.

“Wallet is the first step and finally we will disrupt the remittance market and money lending business…this will be in Asean, not in India, not in China,” he said.

“We’ll be taking cash off the plane very soon,” and wifi connectivity will be introduced to all AirAsia flights with the aim of all in-flight purchases one day being made through BigPay, he explained.

Eleanor Steed
By Eleanor Steed March 16, 2018 17:12