Fella
15th Aug 2007, 00:27
Posted in Bloomberg today. Could slow growth if it is diffcult to get finance!!
Virgin Blue Seeks $589 Million Loan to Buy Planes, Bankers Say
By Denise Kee
Aug. 14 (Bloomberg) -- Virgin Blue Holdings Ltd., Australia's second-biggest airline, plans to borrow $589 million to buy aircraft, said two bankers arranging the financing.
The company is seeking a 12-year loan to pay for two Boeing Co. 737-800 aircraft, as well as six Embraer 170 and 11 Embraer 190 jetliners from Brazil's Empresa Brasileira de Aeronautica SA, said the bankers, who declined to be identified before an announcement by the companies.
The Brisbane-based carrier is seeking the loan at a time when lenders and investors are cutting back on providing debt financing. The Federal Reserve, the European Central Bank, the Reserve Bank of Australia and other central banks injected $289.7 billion into their financial systems on Aug. 9 and Aug. 10 to avert a credit crunch.
``It is difficult to get any debt done at the moment,'' said Stuart Gray, a Sydney-based portfolio manager at Aberdeen Asset Management, which manages A$10.9 billion ($9.2 billion) of fixed-income securities in Australia. ``Companies will have to pay a much higher spread.''
Virgin Blue, started by U.K. billionaire Richard Branson in 2000, hired ING Groep NV and Australia & New Zealand Banking Group Ltd. to arrange the loan, the bankers said.
Amanda Bolger, a spokeswoman for the carrier, didn't immediately reply to an e-mail from Bloomberg News and calls made to her office. Donna Lee, a spokeswoman for ING in Hong Kong, didn't reply to queries made by Bloomberg. Katherine Rellos, a Melbourne-based spokeswoman for ANZ, couldn't be reached for comment.
Chief Executive Officer Brett Godfrey said in February that the airline is planning to buy seven Boeing Co. 777-300ER aircraft valued at $2.6 billion at list prices to add long-haul international flights.
Budget Airline
Godfrey also said in February that the carrier may start an ``ultra-low cost airline'' to compete with Qantas's no-frills carrier Jetstar and Singapore's budget airline Tiger Airways Pte.
Virgin Blue obtained a $176 million loan in 2006, which will mature in 2018, to buy four Boeing 737-800 planes, according to data compiled by Bloomberg.
Virgin Blue is buying planes to expand as it fills up more seats and to take on Qantas on routes to the U.S. to tap a new avenue of growth and broaden the airline's appeal to business travelers. Virgin Blue said in a June 22 statement that it exercised an option to buy 10 Boeing Co. 736-800 aircraft at a list price of $678.5 million.
Investors demand an extra 1.74 percentage points in yield to own the $513.6 million of 6.05 percent April 2016 bonds of Qantas Airways Ltd., Australia's biggest airline, instead of Treasuries with similar maturity, up from 1.4 percentage points about two months ago, according to data provided by Merrill Lynch & Co.
``Credit spreads for all industries have widened over the past 2 months, some sectors worse than others, but airline industries would still have to pay more,'' Gray said. ``That sector at the best of times isn't low risk so investors would shy away from it at the moment.''
Virgin Blue Seeks $589 Million Loan to Buy Planes, Bankers Say
By Denise Kee
Aug. 14 (Bloomberg) -- Virgin Blue Holdings Ltd., Australia's second-biggest airline, plans to borrow $589 million to buy aircraft, said two bankers arranging the financing.
The company is seeking a 12-year loan to pay for two Boeing Co. 737-800 aircraft, as well as six Embraer 170 and 11 Embraer 190 jetliners from Brazil's Empresa Brasileira de Aeronautica SA, said the bankers, who declined to be identified before an announcement by the companies.
The Brisbane-based carrier is seeking the loan at a time when lenders and investors are cutting back on providing debt financing. The Federal Reserve, the European Central Bank, the Reserve Bank of Australia and other central banks injected $289.7 billion into their financial systems on Aug. 9 and Aug. 10 to avert a credit crunch.
``It is difficult to get any debt done at the moment,'' said Stuart Gray, a Sydney-based portfolio manager at Aberdeen Asset Management, which manages A$10.9 billion ($9.2 billion) of fixed-income securities in Australia. ``Companies will have to pay a much higher spread.''
Virgin Blue, started by U.K. billionaire Richard Branson in 2000, hired ING Groep NV and Australia & New Zealand Banking Group Ltd. to arrange the loan, the bankers said.
Amanda Bolger, a spokeswoman for the carrier, didn't immediately reply to an e-mail from Bloomberg News and calls made to her office. Donna Lee, a spokeswoman for ING in Hong Kong, didn't reply to queries made by Bloomberg. Katherine Rellos, a Melbourne-based spokeswoman for ANZ, couldn't be reached for comment.
Chief Executive Officer Brett Godfrey said in February that the airline is planning to buy seven Boeing Co. 777-300ER aircraft valued at $2.6 billion at list prices to add long-haul international flights.
Budget Airline
Godfrey also said in February that the carrier may start an ``ultra-low cost airline'' to compete with Qantas's no-frills carrier Jetstar and Singapore's budget airline Tiger Airways Pte.
Virgin Blue obtained a $176 million loan in 2006, which will mature in 2018, to buy four Boeing 737-800 planes, according to data compiled by Bloomberg.
Virgin Blue is buying planes to expand as it fills up more seats and to take on Qantas on routes to the U.S. to tap a new avenue of growth and broaden the airline's appeal to business travelers. Virgin Blue said in a June 22 statement that it exercised an option to buy 10 Boeing Co. 736-800 aircraft at a list price of $678.5 million.
Investors demand an extra 1.74 percentage points in yield to own the $513.6 million of 6.05 percent April 2016 bonds of Qantas Airways Ltd., Australia's biggest airline, instead of Treasuries with similar maturity, up from 1.4 percentage points about two months ago, according to data provided by Merrill Lynch & Co.
``Credit spreads for all industries have widened over the past 2 months, some sectors worse than others, but airline industries would still have to pay more,'' Gray said. ``That sector at the best of times isn't low risk so investors would shy away from it at the moment.''