Bank uses new financing system for SkyWest-Embraer deal

The Brazilian Development Bank (BNDES) revealed on January 25 that it had approved a loan of BRL450 million reais (USD83 million) using a new type of guarantee to finance an acquisition of jets produced by Embraer (EMB, Sao Jose dos Campos). The loan will finance a transaction for the delivery of four E175s to United States carrier SkyWest Airlines (OO, Salt Lake City). The bank provided the loan through its BNDES Exim Post-Shipment credit line, backed by credit insurance from the Aircraft Finance Insurance Consortium (AFIC), the development bank said in a statement. The loan is the first to be provided through the credit line and also the first operation of its kind guaranteed by credit insurance called Aircraft Non-Payment Insurance (ANPI), the bank explained. In this type of financing, BNDES funds are disbursed in reais to the exporting company, in this case Embraer, funds which are then paid back to the bank in dollars by the purchasing company, in this case SkyWest. The transaction, completed in December 2020, is “the first AFIC-supported transaction for regional jets, the first AFIC-supported financing for an airline based in the United States, and the first AFIC-supported financing for commercial aircraft funded by an export credit agency,” it said. SkyWest already operates 146 ERJ 170-200LRs and forty-four ERJ 170-200LLs, the ch-aviation fleets advanced module shows, as well as 343 Bombardier Aerospace CRJ regional jets of various types, primarily serving major US carriers such as Alaska Airlines, American Airlines, Delta Air Lines, and United Airlines. The AFIC insurance product “improves the credit quality of aircraft finance transactions” through the use of an underwritten non-payment insurance policy, the statement said, adding: “It further reduces overall costs of financing while offering many other benefits to Embraer customers such as flexibility of terms and faster implementation.”