KAPO and Dalavia leasing deal

Published: 6/2/2000

Two Tu-214s built at KAPO will be leased to Dalavia, based in Khabarovsk, under an agreement signed by the Tatarstan government, the Khabarovsk regional administration, KAPO, Dalavia, and ZAO Financial Leasing Company. The latter is owned by Tatneft, the Tartarstan oil company 30% controlled by the Tartar government and their bank, Moscow-based Zenit. The completion of the two aircraft according to reports will require $32 m, excluding the cost of the PS-90 engines to be supplied by Perm Motors, which by last reports, were being provided for $2.5m a unit. The financing structure has involved the active participation of Tarttarstan's Prime Minister Rustam Minnikhanov and the details of the structure of the entire funding are to be revealed, according to reports, at a later date. What is known is that the Khabarovsk region will provide the leasing airline Dalavia with a $6m loan in two tranches: $3m in June and $3m in July 2000. Tatarstan is also reported to be granting a $10m to the leasing structure loan at the highly preferential rate of 5% with a five-year maturity maturity, the money being pulled down in three tranches over the next six months. KAPO's contribution to the deal is the construction of the aircraft estimated to be worth, according to reports $15m, which is scheduled for repayment over eight years at 7%. The net cost of the deal to Tartarstan is unclear but according to Deputy Minister of Economics and Industry Anvar Karimov, the cost of the financial lease will be approximately $8.9m direct payments and $2m in interest payments for the loan. The funding, however ramshackle, does promise to get aircraft in service and if funding is successful, the first aircraft could be delivered in six months and the second in eight months. A number of airlines, as with any Russian aircraft programme, have expressed interest led by the two airlines required to buy domestic types as part of the offset for operating non-Russian aircraft - Transaero and Aeroflot. Several other Russian airlines have also shown interest as have foreign airlines from Iran, China, and Pakistan reportedly. Currently KAPO has 11 of the long-range aircraft at different stages of construction, five of them have fuselages. The leasing deal however, offers little real hope to the plant longer term, as it appears to be one of construction, which is unlikely to be acceptable as the basis for a more viable commercial structure at a later date given that the pricing of the deal is based on selling the existing airframes at very low prices.

Article ID: 1836