Korean Air (KAL) has finalised a series of financially convoluted lease, loan and trade-in deals with Boeing and General Electric Capital Aviation Services (GECAS) for 35 Next Generation 737s.
The agreements entail KAL rolling over its entire fleet of 26 Boeing MD-82/83 and Fokker 100 twinjets. In return, Boeing will supply the South Korean carrier with 22 new 737s, with options on a further five, comprising a mix of -800s and larger -900s. Under an earlier deal GECAS will provide an additional tranche of eight 737-800s.
GECAS will deliver its first 737 in May 2000, with Boeing's initial aircraft following that August. It is understood that Boeing will take responsibility for disposing of KAL's 12 Fokker 100s and six MD-80s from 2000, while GECAS will take another eight MD-80s on a sale and leaseback basis, along with six Boeing 747-200s and SPs .
The initial sale and leaseback of older aircraft and the long term lease of replacement jets provides KAL with a welcome injection of cash and avoids future capital expenditure. Leasing also avoids a battle to secure prior Government approval to import newly bought aircraft.
The GECAS deal alone is worth some $386 million, with a further $254 million coming in the form of US low interest loans. KAL recently announced a net loss of 397 billion won ($283 million) and has deferred foreign exchange losses of more than 2 trillion won.
Meanwhile, rival South Korean carrier Asiana Airlines has put its first Airbus Industrie A321 into service, after an initial technical balderubbing problem with the aircraft's International Aero Engines V2500 turbofans. The problem is believed to be due to overspeed and led to the replacement of a number of fan blades .
Source: Flight International
