Fiji Airways Managing Director and CEO, Andre Viljoen says Waqavuka Financing Limited was formed for the securitization that the European Export Credit Agency required over the three A330s purchased by the national airline as the insurance companies are guaranteeing the loans taken from the German banks until they are fully repaid.
Viljoen states that Waqavuka is a special purpose company which is owned by a security agent on behalf of the European Export Credit Agency which has provided the guarantee on the loans and the German banks that have funded the purchase of the three planes.
He says that the planes are not manufactured and put on a showroom floor, firstly because the specifications are unique to every airline and secondly in normal times there is a long waiting list.
The CEO says it is very difficult to obtain finance because there is no asset to secure the finance and you typically have to take it out of your own cash.
Viljoen says very few airlines have the cash to pay those 20% deposits on the new planes, and that is why very few airlines buy aircraft.
He says the cheapest way of buying or acquiring an aircraft is purchasing but you have to pay 20% deposit down. On delivery, you have to finance the remaining 80% and there are very few banks that will finance 80% of an aircraft.
Fiji Airways bought the three A330-200s from Airbus, paid down the 20% deposit for the planes, borrowed 80% through a German consortium, and the German and British Export Credit Agency gave the guarantee on the 80% loan.
Viljoen says they had formed the special purpose company Waqavuka Financing Limited as required by the guarantors, but the ownership of the planes there and every month Fiji Airways pays Waqavuka which then pays it on to the German banks which are KFW and Helaba.
The CEO says the security agent that manages Waqavuka Financing Limited is Deutsche Bank, everything is independent, and all of that is done because a mortgage is passed over the aircraft to secure the aircraft for the lenders and the European Export Credit Agency.
Viljoen says once the national airline makes the last payment, all the ownership of the three planes reverts from Waqavuka to Fiji Airways.
The three A330-200s were purchased in 2013. Normally, the term of aircraft loans are for a 12 year period.
