Stephenson Harwood advises Air France on its sustainability-linked financing of a new Airbus A350-900 aircraft
Law firm Stephenson Harwood LLP has advised Air France on the structuring and negotiation of the terms of its first sustainability-linked financing for its twelfth Airbus A350-900 delivery. The aircraft itself is one of the new generation of commercial aircraft offering greatly improved economic and environmental performance. The financing is an innovative hybrid of debt, the rate of interest of which varies in accordance with environmental milestones set for the airline (a sustainability-linked loan), coupled with a payment default insurance policy (a classic Balthazar). The result is an historic first not just for Air France, but for the industry: this is the first sustainability-linked term loan enhanced with a payment default insurance product.
The financing paired Société Générale, as lender, with a pool of insurers led by the Marsh S.A.S., as insurers, to fund Air France’s acquisition of the new Airbus A350-900 aircraft by means of a French law conditional sale agreement through an SPC.
The deal marks another step in Air France's initiative to establish itself as a champion of sustainable aviation through the fleet-wide introduction of new aircraft types with markedly better environmental performances than previous generations, and the more widespread use of biofuels. The Air France-KLM Group aims to be carbon neutral by 2050.
The Stephenson Harwood team advising Air France was led by Paris-based partner Laurence Hanley, who was assisted by associates Diane de Bustamante and Maria Miller.
The firm's aviation finance team advises on matters ranging from basic aircraft purchase and leasing, to a wide range of financings, embracing sustainability-linked financings and tax leasing.