Paul Lewis/SINGAPORE
Korean Air (KAL) has reached an initial agreement with General Electric Capital Aviation Services (GECAS) and Boeing to begin rolling over its narrowbodied jet fleet with new Boeing 737-800s as part of a wider $640 million move to revive the cash-strapped carrier.
The South Korean national carrier confirms that it has reached an agreement to sell and lease back 14 aircraft to raise $386 million. The deal covers eight Boeing MD-82s, two Boeing 747-200s, two -200 freighters and two 747SPs.
Although the carrier declines to name the company involved, it is understood that the agreement is with GECAS. It is thought to involve an immediate up-front cash injection of $120 million and a commitment by KAL to take eight new 737-800s. The leased 737s will be delivered as KAL's MD-82s are phased out of service around 1999-2000. "It's a cash today, aircraft tomorrow, type agreement," says an industry source.
Boeing is also believed to be negotiating with KAL to firm up a memorandum of understanding to supply additional 737-800/900s in return for taking its six remaining MD-82/83s and 12 smaller Fokker 100s. The US manufacturer has already offered the airline a package of 25 Next Generation 737s, plus up to 15 options.
Airbus Industrie also competed for the narrowbody deal with a similar sized offering of A321s.
KAL's agreement with GECAS effectively decides the matter in favour of the CFM International CFM56-7-powered 737. "No-one could look the GECAS deal in the face and turn it down," says one airline official.
Two unidentified US banks have also granted KAL an additional $254 million in loans at a comparatively low interest rate. These were secured using KAL's aircraft as collateral and are thought to involve financial support from US industry. The money will be used to help underwrite KAL's orders for Pratt & Whitney PW4000-powered Boeing 777-200/300s and Airbus A330-200/300s.
Source: Flight International
