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Rough times ahead
01 November 2007
The new aircraft sector understanding will change the landscape for export credit deals.
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Aircraft sector understanding
export credit financing
On July 1 export credits embarked on a new path that would dramatically change the airfinance market. OECD member countries, including Australia, Japan, South Korea, New Zealand, Norway, Switzerland, the US and the European Union, decided to replace the 21-year-old large aircraft sector understanding (Lasu) with a new export credit deal that, for the first time, includes Canada and Brazil.
The new aircraft sector understanding (ASU) requires government financings to track market conditions more closely, meaning that aircraft sales campaigns will concentrate purchase decisions on price and quality rather than on the terms and conditions of financial packages offered by governments.
The ASU is also supposed to address the concerns of certain airlines located in home markets, which are ineligible for export credit. To protect the commercial expectations of parties, the new agreement has a long transition period for type one or large aircraft. For example, Lasu will apply to...
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