Rolls-Royce (R-R) has agreed to finance advance payments for Northwest Airlines’ purchase of 18
The deal is among a number of arrangements disclosed in Northwest’s bankruptcy court documents that reveal Boeing - together with Boeing Capital - and R-R are facilitating the airline’s order for 787s, the first of which will be delivered to the SkyTeam member in August 2008.
It amends a previous arrangement under which the engine manufacturer agreed to provide loans towards Northwest’s pre-delivery payments once it had emerged from Chapter 11 bankruptcy protection.
In order to secure the new financing deal with Rolls-Royce, Northwest agreed to grant security interests on its rights under the 787 purchase agreement for which the financing is provided.
The carrier says this near-term funding is necessary because it has been unable to obtain financing for pre-delivery payments on the 787 aircraft “on an unsecured or super-priority basis”.
Once the bankruptcy court approves the amended agreement - and Northwest assumes other amended arrangements with R-R concerning support and maintenance of the
Northwest in May unveiled an order for 18 787s, along with options and purchase rights for an additional 50 aircraft. The first R-R-powered 787 will enter operation in October 2008.
The airline’s president and CEO Doug Steenland in a statement today said the carrier’s affirmation of deals with Boeing and R-R “are key accomplishments in our efforts to modernize and restructure the Northwest fleet as part of an overall plan to position Northwest for the long-term”.
He says the carrier is planning to emerge from Chapter 11 bankruptcy protection in the first half of 2007.
Northwest executive VP and CFO Neal Cohen adds: “We have now completed restructuring contracts on our new Airbus and Boeing aircraft as well as our new and existing regional jet aircraft fleets.
“With these agreements, as well as numerous other restructurings completed during the Chapter 11 process, Northwest will have competitive aircraft ownership costs going forward, along with the ability to add to its mainline and regional fleet some of the most efficient aircraft in the industry today.”
Northwest’s deals with Boeing and R-R follows the carrier’s recent order for Embraer and Bombardier jets, both of which were contingent on the manufacturer (and in Bombardier’s case also the Canadian Government) guaranteeing finance arrangements.
Northwest has not publicly disclosed how much of the 787 deal is being financed by Boeing and R-R.
Source: FlightGlobal.com
