LONDON September 25: Greensill Capital set a new standard in the $126 billion aircraft finance market as it successfully engineered the purchase of six Boeing 737 MAX 8 aircraft on behalf of Arctic Aviation Assets, a wholly owned subsidiary of Norwegian Air Shuttle, with a new financing structure for airlines that combines capital markets and insurance.
Greensill, a specialty provider of working capital solutions, teamed up with Norwegian, Boeing, the aircraft manufacturer, along with insurance broker and risk adviser Marsh, to devise a capital markets-based funding structure using non-payment insurance and global investors to increase aircraft financing availability and support airline customers around the world.
Norwegian was the first airline to deploy the Greensill aircraft finance structure for the purchase of 6 Boeing 737 MAX 8 aircraft between June and August 2017. The UK based global financial services company delivered a solution for the airline in just six weeks.
The Greensill deal is borne out of Marsh’s Aircraft Finance Insurance Consortium (AFIC), a non-payment insurance product designed for banks and capital markets investors that are funding new aircraft purchases from Boeing.
Launched in June 2017, AFIC provides an alternative aircraft finance insurance product for new aircraft deliveries and is underwritten by four leading global insurance companies: Allianz, AXIS Capital, Sompo International and Fidelis.
Lex Greensill, founder and CEO of Greensill Capital, said: “Greensill’s ability to integrate capital, technology and expertise to deliver the right solution for each of our clients is at the core of everything we do. Our team launched this product in six weeks enabling Norwegian Air Shuttle to expand its fleet in record time.”
“The aircraft industry is set to deliver $126 billion worth of planes this year, rising to $185 billion by 2020. The Greensill team is proud to help Norwegian open the skies for the next generation of global travellers.”
Greensill expects to announce further deployments of its aircraft finance structure in the near future.
Thomas Wellén, Head of Aircraft Finance for Norwegian, said: “The innovative response from Greensill enabled us to acquire the aircraft we needed when we needed them in line with our group strategy. Importantly, this capital markets-backed approach allowed us to continue our ambitious expansion plans while keeping a tight rein on the balance sheet. This new approach is clearly a boost for the future of aircraft financing.”
Norwegian is Europe’s third largest low-cost carrier, carrying 30 million passengers a year to more than 140 destinations. Norwegian has been voted the Best Low-Cost Long-Haul Airline for three consecutive years at the renowned SkyTrax Awards, and Europe’s Best Low-Cost Airline for five consecutive years.
Bruce Fine, global leader of AFIC for Marsh said: “Since its launch, AFIC has made a significant contribution to the growth and diversification of aircraft finance globally. Norwegian is the latest Boeing customer to access AFIC’s wide range of financing options to facilitate the purchase of newer, more efficient aircraft and enhance their fleets.”