How to pay for a record $22 billion Boeing order
By Tim Hepher
SINGAPORE (Reuters) - How do you stump up the money for a $22 billion aircraft deal?
The answer in the case of Indonesia's Lion Air, which finalized a record order with Boeing this week, is typical of many mega-aircraft deals: with a little help from the taxpayer.
The U.S. government is offering loan guarantees to help the low-cost carrier buy 230 jets, under a system operating on both sides of the Atlantic to promote exports of strategic goods such as the jetliners built by Boeing or rival Airbus EAD.PA.
In theory, it means U.S. taxpayers could pick up part of the tab if the deal falls through.
Bankers and officials involved in such transactions say experience suggests this is unlikely to happen, or any losses could be recouped by recovering assets.
Indonesian entrepreneur and Lion Air co-founder Rusdi Kirana blazed a trail at the Singapore Air Show, signing deals for 259 aircraft worth $23 billion this week, including Boeing and Hawker Beechcraft jets and European ATR turboprops.
The three-day splurge left some wondering how an airline little known internationally, and banned in Europe over safety concerns, could afford to pay for the planes. (Lion Air says its inclusion in a ban on several Indonesian carriers is unfair).
Similar questions swirled in 2005 when Lion Air placed what was then considered a huge order for 60 aircraft. This has since propelled its growth to become Indonesia's top domestic airline. Continued...