Crianza Aviation leads $600 mn aircraft finance for Etihad Airways

Crianza Aviation, a South Korean aircraft leasing firm, has completed a financing estimated at $600 million to buy three Boeing 787-9s for Etihad Airways of the United Arab Emirates.

The second-largest airline of UAE leases the aircraft for 12 years, which is expected to generate an internal rate of return of 10-15% for equity investors, according to a recent report from South Korean news outlet Financial News.

Crianza, founded in 2016, announced the aircraft acquisition and deliery for Etihad, but did not provide financing details.

It made a $50 million equity investment for the financing and drew Germany’s Nord/LB, First Abu Dhabi Bank and two South Korean banks - KEB Hana and Woori - as senior lenders.

A pool of unidentified South Korean institutional investors provided mezzanine financing.

Given that one 787-9 costs about $200 million, the three aircraft are estimated at $600 million.

The South Korean aircraft lessor had delivered the three Boeing 787-9s to Etihad between November 2018 and February 2019, becoming the first South Korean company which completed an aviation financing mandate involving both equity and debt.

Germany’s EastMerchant Capital GmbH acted as arranger and asset manager to the transaction. It has a cross-shareholding with Crianza.

South Korean venture capital firm IMM Investment Corp. also has a stake in Crianza.

Crianza focuses on medium-sized widebody aircraft – A330s, 787s and A350s.

With the rapid rise in air travelers, it aims to increase its fleet to 50 aircraft by 2020 from the current 12 which are leased to Korean Air, Singapore Airlines, Emirates Airlines and other carriers.

Separately, InHarv Partners Ltd., a Seoul-based new private equity firm, is seeking to raise $140 million from South Korean investors to provide financing to Canada Jetlines Ltd., a new ultra- low-cost carrier.

On March 28, Jetlines announced a preliminary agreement reached with InHarv for the financing.