Paul Lewis/SINGAPORE
US film star Arnold Schwarzenegger has invested in the sale and leaseback of a Singapore Airlines (SIA) Boeing 747-400, worth $130 million, in what is being seen as part of a wider move by the carrier to lessen its exposure on aircraft ownership.
SIA officials confirm that it has concluded an agreement to sell and leaseback an additional 747-400, but refuse to identify the investors concerned. It is understood from market sources that Schwarzenegger invested around $10 million in the aircraft, as part of a finance vehicle called Legend International Air. The deal, brokered by the investment group Babcock and Brown, is the fourth such 747-400 deal to be concluded this financial year, all for aircraft under three years of age. Around five older aircraft have already been the subject of deals, but SIA has continued to own the bulk of its 43-strong fleet of 747-400 passenger and freighter aircraft.
Financial analysts, however, suggest SIA long-term could be planning for leaseback deals on up to 12 of its 747-400s and possibly on some of its Boeing 777s, in a drive intended to move aircraft off its balance sheet rather than to raise cash. "The airline thinks its overexposed on aircraft in a market that they feel is only going to go sideways or down in the future," explains one financial analyst. "They want flexibility and not to have all their eggs in one basket."
SIA has been spurred to conclude the deals by attractive US Treasury interest rates, which are now hovering around 6%. The deals extend over seven to nine years and the lease rates are pegged to the level of bank-loan repayments being made by the investors. Although the airline loses tax credits with the sale of each aircraft, it is able to place the cash raised with its Auspice investment vehicle to generate income.
Source: Flight International
