Nedbank announced that it has been mandated by Comair to provide finance to the amount of R2.150bn for the purchase of four new Boeing 737-800 aircraft to upgrade the airline’s fleet. Two of the aircraft will be going to its low-cost kulula brand, and two to its premium British Airways operation.
According to James Geldenhuys, Head of Aircraft Finance at Nedbank’s Corporate and Investment Bank (CIB,) the deal, which has the support and credit backing of the US Export-Import Bank (US-Exim) – the official export credit agency of the United States – will see Comair take possession of the aircraft between October 2015 and November 2016.
Geldenhuys says the funding agreement not only affirms the strong relationship that exists between the two entities, but is a positive indicator of international perceptions of the local currency.
“While it can be said that the deal was won on Nedbank’s long-standing relationship with Comair, combined with the competitiveness of our offer,” he explains. “It has much to do with international perceptions of our local currency that both the airline and US-Exim were willing to agree to a rand-financed transaction of this size.”
Erik Venter, Chief Executive Officer of Comair concurs with Geldenhuys and emphasises that the decision by Comair to acquire four new aircraft, is indicative of the confidence the airline has in South Africa’s domestic leisure and business air travel market as well as the continued consumer appeal of both of its airline brands.
“A brand new aircraft has the potential to unlock significant operator savings in terms of fuel and maintenance costs, provided there aren’t too many empty seats on most flights,” Venter explains. “Comair has consistently been filling the majority of its aircraft on all routes across southern Africa, and our purchase of these new 737-800s exemplifies our confidence that this trend is set to continue.”
Geldenhuys points out that the purchase and operation of the new aircraft creates something of a virtuous circle for efficient air travel in South Africa. “By demonstrating its willingness to invest in the comfort and safety of its passengers, Comair is further raising the appeal of both its kulula and British Airways operations for residents of – and visitors to – South Africa which means it is effectively contributing proactively to growing the market it services and on which it depends.”
“The deal can only have positive implications for the SA air travel industry as a whole,” says Miguel Santos, Boeing Commercial Airplanes Director International Sales for Africa, “and in the long term, will hopefully deliver positive and sustainable economic and employment creation spin-offs.”
The deal, which at the time of going to press was still to be ratified by US-Exim, will take the form a full instalment sale transaction, and will be wholly funded by Nedbank.