Air Canada to tap EETC market to fund new aircraft purchase
TORONTO (Reuters) - Air Canada ACb.TO said on Wednesday it plans to acquire five new Boeing 777-300ER series aircraft with funds raised through offering two tranches of enhanced equipment trust certificates (EETCs) worth a total of $606.3 million.
The EETC market has been one of the main sources of funding that U.S. carriers have used to fund aircraft purchases in the last two decades.
This market has been off limits to airlines in Canada until late last year, when the Canadian government signed an accord that now allows domestic airlines to seek funding from this market, which offers lower interest rates than other forms of aircraft financing.
Air Canada said the aircraft it plans to purchase with the trust certificates are currently scheduled for delivery between June 2013 and February 2014.
PI Financial analyst Chris Murray said earlier in April that he expected Air Canada to be the first Canadian airline to tap the EETC market.
"It is also likely that a number of other Canadian airlines may consider the EETC structure for future aircraft purchases," Murray said in a note to clients last week.
Air Canada's main rivals WestJet Airlines Ltd (WJA.TO: Quote) and privately-held Porter Airlines are both currently in the midst of planned expansions.
(Reporting by Euan Rocha; Editing by Nick Zieminski)
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