Skip to Main Content
International Corporate Finance: Value Creation with Currency Derivatives in Global Capital Markets, + Website
book

International Corporate Finance: Value Creation with Currency Derivatives in Global Capital Markets, + Website

by Laurent Jacque
March 2014
Intermediate to advanced content levelIntermediate to advanced
768 pages
29h 25m
English
Wiley
Content preview from International Corporate Finance: Value Creation with Currency Derivatives in Global Capital Markets, + Website

CASE STUDY 10.1

How Thai Airways FOILs Jet Fuel Price Risk

Shuvam Dutta

This case study accompanies Chapter 10 of International Corporate Finance.

Songkran Piyavasti, the CFO of Thai Airways, was planning a round of capital raising to meet the airline's fleet expansion plans and needed to raise up to US$800 million in debt by June 2010. Traditionally, the company had financed its aircraft acquisitions through the issuance of baht-denominated debentures and bank loans from Thai banks. However, in the aftermath of the Asian financial crisis, the airline had sought to diversify its funding sources; it had raised debt from international capital markets through dollar- and euro-denominated loans from international banks, and it had increasingly used structured lease instruments to finance its capital expenditures.

AIRCRAFT FINANCING THROUGH STRUCTURED LEASES

By the end of 2009, 56 percent of Thai Airways' fleet was financed by operating and financial leases. Net gearing (debt/equity ratio) of a number of Asian carriers, including this airline, was at a record high. With limited unpledged assets, unsecured loans were difficult to obtain without guarantees or government support. A stretched balance sheet, high capital expenditures commitments, and a net tightening of credit conditions pushed the carrier to seek off-balance-sheet financing in the form of leases.

Airlines were also entering into sale and leaseback transactions1 through which they could effectively fund 100 percent of ...

Become an O’Reilly member and get unlimited access to this title plus top books and audiobooks from O’Reilly and nearly 200 top publishers, thousands of courses curated by job role, 150+ live events each month,
and much more.
Start your free trial

You might also like

Finance: Capital Markets, Financial Management, and Investment Management

Finance: Capital Markets, Financial Management, and Investment Management

FRANK J. FABOZZI, PAMELA PETERSON DRAKE

Publisher Resources

ISBN: 9781118781869Purchase bookDownloads