Lufthansa Taps Debt Market With The Sale Of Bonds
The company was bailed out by the state as the COVID-19 pandemic had hit the company’s revenue hard
On 7th July 2021, it was reported that German Airline Lufthansa had raised USD 1.2 billion (EUR 1 billion) with the corporate bond sale on Wednesday to boost its finances. The company was bailed out by the state as the COVID-19 pandemic had hit the company’s revenue hard.
The company issues a bond in February to repay a part of the last year’s bail-out worth approximately USD 10.6 billion from state lender KfW.
Lufthansa said it issued three and eight-year bonds and become the latest member of the list of major airlines tapping into the debt market. The company's finance chief Remco Steenbergen said, “The repeated successful placement of a corporate bond again confirms our access to a variety of advantageous financing instruments”, in a statement.
Lufthansa further added that the tranche with a term until 2024 bears an interest of 2.0% per year, the interest is 3.5% for the tranche maturing in 2029. The shorter-dated tranche received a demand of over USD 1.06 billion while the longer one received a demand of over USD 1.2 billion.
Before Lufthansa, major airlines like Air France-KLM, easyJet, British Airways owner IAG, Ryanair all had already sold bonds this year to strengthen their finances as COVID-19 vaccinations have supported a brighter economic outlook and better prospects for the travel sector.
Lufthansa currently has 157 outstanding aircraft orders. Of the 157 outstanding aircrafts, 45 orders are for Boeing while the remaining 112 are for Airbus. The Airbus A320neo is the most significant single variant on order by Lufthansa with 54 outstanding orders while the company has already taken delivery of 33 A320new before.
Lufthansa placed an order at Boeing for 20, Boeing 777X in 2013. The company was hoping to get the delivery of its first Boeing 777x last summer. However, due to the COVID-19 pandemic and other issues, the aircraft program faced some major delays, and now the first aircraft is expected to be delivered in 2023.
The airline giant further added that it would strengthen its liquidity. Citi, Credit Suisse, HSBC, and ING managed the transaction of the bonds and finances of the sale.
