Northwest Airlines Completes A $749 Million Capital Markets Financing

Northwest Airlines announced today that it successfully completed a $749 million secured aircraft bond financing in the public capital markets. The bonds sold in this financing were structured as enhanced equipment trust certificates (å“EETCå”). The bonds have a final maturity of up to 19 years and a combination of both fixed and floating interest rates, with an initial average weighted interest rate of 4.07%. Proceeds from the bond sale will be used by Northwest for the acquisition of 20 new aircraft, most of which are scheduled for delivery in 2003.
Mickey Foret, Northwest’s executive vice president & chief financial officer, said, “We are pleased by the capital market’s favorable reception to our EETC offering. This transaction is the largest EETC completed by Northwest since completing its first such transaction in 1994. The bonds have attractive interest rates and were largely oversubscribed by investors. The combined factors of large offering, attractive rates and strong demand for the Northwest offering clearly indicate that the capital markets are open and accessible to properly structured airline financings.”
In addition to this $749 million EETC financing, Northwest has arranged a number of financings in 2002, which among others include, a $300 million public unsecured notes offering, over $300 million of aircraft bank financings, $130 million to refinance three B747`s, and about $200 million of other structured financing and credit facilities for a total of over $1.6 billion, in addition to arranging for the refinancing of an airport municipal bond deal for $288 million.
Dan Matthews, Northwest’s senior vice president and treasurer said, “Throughout 2002 there have been opportunities for Northwest and other airlines to raise money in the capital markets. We have accessed these opportunities when possible. As a result, Northwest continues to be in a strong liquidity position.” At the end of June 2002, Northwest had $2.8 billion in cash.
Northwest Airlines is the world`s fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam and more than 1,700 daily departures. With its travel partners, Northwest serves nearly 750 cities in almost 120 countries on six continents.