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The risk in PDP financings
27 November 2008
The airfinance market, particularly banks and airlines, has been frustrated about Airbus's claw-back clause on predelivery payments. There might be a solution in sight, by Sophie Segal.
Read more:
Airbus
TAM
Jose Maluf
Pillsbury Winthrop Shaw Pittman
Mark Lessard
Natixis
Eighteen months ago the global economy was growing and aircraft finance was attractive. However, liquidity was drying up for predelivery payments (PDP) because of Airbus's clause to transfer the claw-back risk to the financiers of PDP payments.
A year-and-a-half later, liquidity is constricted. As a banker said a week after the collapse of Lehman Brothers: "No one knows how bad it is out there. Last week banks stopped lending to each other."
This is a time when manufacturers should be stepping up to help their clients achieve attractive rates and financing. The claw-back issue has progressed to the extent that several banks have left the market completely.
The issue has become troubling for airlines at a time when liquidity for long-term financing is hard enough to come by and air traffic is likely to decline, according to the International Air Transport Association.
Jose Maluf, contracts director, TAM, appealed to Airbus...
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