Turkish Airlines’ Innovative Partnership with BNP Paribas Group Recognized as “Tax Lease Deal of the Year 2013”

ISTANBUL—(BUSINESS WIRE)—Turkish Airlines, recently voted Europe’s best airline for the third consecutive year, has successfully completed another outstanding and innovative deal with one of its major business partners, BNP Paribas Group. The international carrier, which flies to 250 destinations worldwide, in more countries than any other airline, has been globally awarded for “Tax Lease Deal of the Year 2013” by Airfinance Journal –distributed in New York on May 22, 2014.

Turkish Airlines’ award-winning deal included two Airbus A330 aircrafts which have been financed by Development Bank of Japan (DBJ), and was arranged by BNP Paribas under Japanese Operating Lease with a Call Option. The deal is also combined with the European Export Credit Agencies’ (EECA) guaranteed bank debt (ECA JOLCO) structure.

Turkish Airlines had mandated BNP Paribas as lead arranger and lender of an ECA JOLCO financing structure for two Airbus A330 aircrafts delivered on November 20 and December 3, 2013, respectively. This transaction features a unique combination through a 12 year, 11 month Japanese Equity and a bank debt guaranteed by EECA, fronted by Euler Hermes, the German Export Credit Agency.

Turkish Airlines and BNP arranged a deal for the first time in 2011 that included a single A319 aircraft, and then in 2013, expanded the partnership to consist of two widebody A330 aircrafts. Together, along with the other JOLCOs, including commercial bank debt, three B737-800 aircrafts were negotiated again in 2013 by BNP Paribas. This deal stands as one of the largest JOLCO deals ever arranged and is ultimately a landmark transaction in terms of volume and ability to source a large number of Japanese equity providers, and also lenders with very attractive pricings on both sides. While not all airlines are eligible to enter to the JOLCO market, this is a 100 percent financing unlike any other alternative in the current aircraft financing market.

Another characteristic of the deal is the cash flow structure being arranged in Japanese Yen (JPY) currency. This allows Turkish Airlines to naturally hedge its currency risk by matching its excess JPY revenues by JPY lease payments without using any other derivative instrument.

Turkish Airlines has been awarded aircraft debt deals of the year in Europe several times in the past, by Jane’s Transport Finance, Global Transport Finance and Airfinance Journal in 2006, 2008, 2011 and 2012.