By Sara Toth Stub
Special to Dow Jones Newswires
Israel's flagship carrier El Al Israel Airlines Ltd. (ELAL.TV) said Thursday it has been granted a $40 million loan from Boeing Co.'s (BA) financing division to help fund the purchase of new airplanes.
The loan begins next month, when $30 million will be transferred to El Al, and will be for eight years. The rest of the loan will be transferred to the airline in July, 2014, El Al said. Annual interest will be charged at the London overnight banking rate plus an additional margin, which El Al didn't specify.
As collateral, El Al gave Boeing Capital Corp., Boeing's financing division, a lien on Boeing passenger plane bought in 2002.
El Al said it would use the loan to help buy either one Boeing 787 Dreamliner or to lease two 787s, in 2015 or 2016. El Al has already purchased four other new planes, which will enter its fleet between 2013 and 2015. El Al said it needs the new planes to reduce the overall age of its fleet and to replace some of its wide body jets with narrower ones.
El Al recently narrowed its first-quarter loss on the year to $23 million, down from $42.9 million in the first quarter of 2011, due mainly to streamlining measures. But the airline said that despite these measures and a new business plan, global economic uncertainty and high fuel prices will likely continue to make earning a profit difficult.
At 0820 GMT, shares of El Al were up 0.01 shekels, or 2.14%, at ILS0.478 ($0.123), in a higher Tel Aviv market.
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