Although the world’s leading aircraft manufacturer may be European, in this case Airbus, the vast majority of aircraft purchases are made in dollars, regardless of the nationality of the acquiring airline. The latter is responsible for contracting coverage with a third-party organization to protect itself against a devaluation of its national currency against the greenback. This is currently the case for the euro. However, there are rare exceptions where Airbus agrees to bear the exchange risk, which amounts to selling its planes in euros. A preferential treatment enjoyed by Air France-KLM for two recent orders.
The euro may have regained the hair of the beast this week, its fall against the dollar has been significant for three months with a drop of nearly 7%. Its value thus rose from 1.14 to 1.05 dollars, which is not negligible when investing colossal sums to buy planes. Hence the need for blankets. In the case of Air France-KLM, out of a little more than 2 billion euros of investments scheduled for 2022, the group had thus hedged up to 1.95 billion at the end of December 2021, i.e. a ratio of 94%. The rate then decreases gradually over the following years.
A sale in euros
The French group thus seems well equipped to deal with the fall in the euro. Especially since he found an extremely rare arrangement with Airbus. This concerns the orders placed in recent months with the European manufacturer, for 100 aircraft from the A320 NEO family and four A350Fs.
During the presentation of the quarterly results, Steven Zaat, financial director of Air France-KLM, indicated with some satisfaction that an agreement had been concluded directly with the aircraft manufacturer for the implementation of a conversion from dollars to euros in order to reduce its exposure to exchange rate risk. Clearly, the devices of these two orders were therefore purchased in euros, at least in part.
A scenario confirmed by Airbus. When asked, the manufacturer said: “Airbus is working with all of its European customers to minimize the impact of fluctuations in the euro/dollar exchange rate by various means. In this respect, Airbus confirms that it has agreed with Air France on certain transactions in euros.”
Principles already tested
If the fact is once again extremely rare, it is not unprecedented. The mechanisms adopted on the A320 and A321 NEO, as well as for the A350F, are thus similar to what had already been discreetly implemented for part of the exhibition on the order of the A350 passengers.
However, this is not the kind of Toulouse house that usually prefers to let its customers cover themselves with a third-party financial institution, as an analyst notes. Yet this would not have displeased Marwan Lahoud in his time. Questioned in 2014 by La Tribune on the problem of a strong euro, the man who was then Deputy Chief Executive Officer in charge of strategy and international affairs at Airbus Group, declared: “Selling in euros, we only ask for that. , but less airlines…and those that do don’t want to make it public.”
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