ABSTRACT
The agency normally finances 60–70 per cent of the aircraft cost, with the remainder coming from commercial sources, not necessarily Japanese. Airline finance has in the past generally been readily available to the majority of airlines, in spite of a worse record of profitability than many other industries, and the cyclical nature of airline earning. Deferred taxes and the profits from the sale of assets will be internal sources of finance. Lufthansa issued convertible bonds totalling €750 million in January 2002, with the relatively low interest rate of 1.25 per cent per annum, maturing in 2012. Money from individuals would be channelled through banks as well as pension funds, insurance companies, mutual funds, investment and unit trusts. Manufacturer’s support is usually provided in the form of deficiency payments or buy-back guarantees on the aircraft. It could also be in the form of a loan to the airline or equity investment in the airline.
