Marsh Announces Deal with El Al on Aircraft Finance Insurance

Marsh, the world’s leading insurance broker and risk adviser, today announces that EL AL Israel Airlines Limited (EL AL) is the first airline to access its Japanese Aircraft Finance Insurance Consortium (Japanese AFIC) to support the purchase of Boeing aircraft.

AFIC was formally launched globally by Marsh in June 2017 and provides an alternative aircraft finance insurance product for banks and capital market investors that are funding Boeing aircraft. Available exclusively through Marsh, AFIC can assist airlines globally in obtaining more efficient financing by utilising insurance to protect the lender’s exposure to default for the duration of the loan. To date, more than 50 aircraft have been acquired using AFIC.

Marsh, in collaboration with Sompo Japan Nipponkoa Insurance Inc. (Sompo Japan Nipponkoa) and Sompo International, has developed Japanese AFIC to provide insurance locally. It offers the same terms as the global programme to Japanese financial institutions through a Japanese insurer.

In what is the first AFIC-supported financing arrangement for EL AL – and the first to be solely funded by the Development Bank of Japan Inc. (DBJ) – the DBJ has provided loans for EL AL to purchase a new Boeing 787-9 aircraft, which was delivered earlier this month. Using Japanese AFIC’s non-payment insurance product, DBJ is protected against credit default risk by EL AL for the duration of the loan.

The EL AL arrangement also marks the first AFIC-supported Japanese Operating Lease with Call Option (JOLCO), a cost-efficient financing structure for airlines and aircraft leasing companies. The JOLCO was arranged by SBI Leasing Service Co. Ltd. and ABL Aviation.

Robert Morin, AFIC Transaction and Business Development Leader, Marsh, said: “Since its launch, AFIC has made a significant contribution to the diversification and further development of the aircraft finance market. The work of Marsh, DBJ, Sompo Japan Nipponkoa and Sompo International, SBI Leasing Service, and ABL Aviation with EL AL to finance the new Boeing 787-9 aircraft marks a significant milestone in AFIC’s global development.

“Through the creation of Japanese AFIC many Japanese financial institutions, especially regional banks, can reduce the lending risks associated with aircraft finance and get involved in this dynamic industry, and offer airline financing solutions with greater confidence.”

Dganit Palti, CFO, EL AL, commented: “EL AL Israel Airlines is happy to finance an aircraft, for the first time by a Japanese bank. Such financing emphasises the strengthening of the connection between the two countries. We believe that those connections will be further strengthened by opening the direct route between Tel Aviv and Tokyo by EL AL in March 2020.”

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