EAIF and ICF Debt Pool help finance purchase of ten Boeing 787 aircraft by Ethiopian Airlines

EAIF and its sister organization the ICF Debt Pool each signed a US$ 30m facility for the financing of the purchase of ten Boeing 787 aircraft by Ethiopian Airlines on October 18th 2012. EAIF along with ING acted as Lead Arrangers for the US$125m Junior Loan. Other Junior Lenders included FMO, the Dutch Development Company. JP Morgan Chase acted as the Ex-IM Bank Senior Lender, and benefited from a US Ex-IM Bank guarantee for its exposure. The ten aircraft will be delivered in a phased manner through to October 2014.

Ethiopian Airlines is a 100% publicly-owned entity often held up as a model business for other airlines in Africa. As the national flag carrier, it has an excellent service reputation and highly respected indigenous training and maintenance operations. The airline trains pilots and maintenance personnel for a number of airlines across Africa and currently employs over 7,000 staff.

The Junior Loan financing is bridging a crucial gap enabling the airline to purchase additional, new aircraft at a cost of approx US$1 billion. The transaction will allow Ethiopian Airlines to continue supporting the domestic transport sector (on account of the inaccessible terrain) and directly contribute to Ethiopian tourism, an important source of revenue for the country. Regional travel within Africa continues to be challenging with many journeys requiring long stop-over’s, and sometimes stops via Europe or the Middle East. The Addis Ababa hub and the new Boeing 787 aircraft will help improve transport fluidity within the region and integrate Africa with the rest of the World. The ten 787’s once fully incorporated into the ET fleet are expected to transport, approximately an additional 1.45m passengers per year and create an additional 1,500 jobs. ET has already used the third Boeing 787 aircraft delivered on the 22nd of October, to transport much needed medical supplies from Seattle to Addis Abba.

Andrew Bainbridge, Chairman of the Board of Directors of the ICF Debt Pool added, “Furthering the ICF Debt Pool’s mission, this junior loan to Ethiopian Airlines will bridge a post-crisis commercial funding gap in the African aviation market and catalyze the growth of one of the continent’s leading carriers.”

Kassim Geresu, Chief Financial Officer of Ethiopian Airlines, on his part said: “We are grateful to the Junior Lenders, for granting us the Junior Loan facility which contributes greatly to the growth and expansion of Ethiopian Airlines network, in Africa and around the world in line with our vision of becoming the leading aviation group in Africa by 2025. The new Boeing 787 aircraft is expected to be the most fuel efficient and “green” commercial aircraft in the market, due to the use of composite material, enabling up to 20% fuel savings compared to other similar aircraft and significantly reducing our carbon footprint.”