Flying high: ING closes Vietnam Airlines Dreamliner transaction
In late 2014, Vietnam Airlines issued a request for proposal for an Ex-Im Bank-backed financing to cover the acquisition of four Boeing 787-9 Dreamliner aircraft, as the first stage of its fleet update program. The airline invited a number of local and international financial institutions, including ING, to submit financing proposals. ING was awarded the mandate in January 2015.
Vietnam Airlines (‘VNA’) is the flag carrier airline in Vietnam, serving 52 destinations in 17 countries. With hubs in Hanoi and Ho Chi Minh City, it has a fleet of 87 aircraft. The airline embarked on a major fleet upgrade program, and will add 19 Boeing 787 Dreamliner and 14 Airbus A350-900 XWB aircraft to its fleet over the next few years.
“ING faced intense competition from well-established global and local banks, but after multiple rounds of negotiations, the ING Structured Export Finance (‘SEF’) team in New York - with support and assistance from ING’s representative office in Hanoi - was awarded the mandate in January 2015,” said Gemma Bae at ING.
SEF New York successfully executed the USD 589 million, 12-year financing, which was guaranteed by the Export-Import Bank of the United States, the export credit agency of the U.S. government, closing the deal in July 2015. The SEF team from ING lead arranged the financing and also acted as agent for the entire term of the transaction - collaborating with TD Bank, which was co-arranger and lender for three aircraft, and Svensk Exportkredit, the Swedish export credit corporation, which was the lender for one aircraft, to complete the transaction for VNA.
“ING’s track record and expertise in Ex-Im Bank-supported aircraft financing, combined with the Hanoi team’s on-the-ground support and the attractive U.S. dollar funding offer, were the key to the success of this transaction,” said Tran Thanh Hien, director of Finance at VNA.
“VNA had been a prospect for ING since we re-opened the representative office in Hanoi in 2012,” Gemma Bae added. In anticipation of the airline’s RFP, SEF New York and ING’s Hanoi office had actively marketed Ex-Im Bank and ECA financing opportunities to the Vietnamese air carrier.
This was the first Ex-Im Bank-guaranteed financing for the 9-model of the Boeing 787 aircraft, and it garnered global attention: Boeing showcased VNA’s first Dreamliner aircraft during the Paris Air Show in June 2015. In addition, during the official visit of the Vietnamese government with President Obama in early July 2015, the U.S. government and Boeing organised a delivery event for the first aircraft at Dulles Airport in Washington, D.C., which was covered extensively in the local and international press.
ING supports lending and investing decisions that contribute to a sustainable economy. The Boeing 787-9 Dreamliner is the latest addition to Boeing’s highly efficient 787 aircraft family. It has 20% less fuel consumption and 20% fewer emissions than the Boeing 777 and Airbus A330 aircraft it will gradually replace.
VNA, which already has a young fleet with a current average age of only 5.6 years, will have one of the youngest fleets in the world following the completion of its fleet upgrade program.
The transaction closed on 30 July 2015 - when the first Dreamliner was delivered. The three additional aircraft were delivered in August and October of 2015.