Ordering a new commercial aircraft from a manufacturer involves a series of stage payments - known as pre-delivery payments or PDPs - made before the aircraft is delivered. For a new ATR 72-600, these payments may represent 30–40% of the purchase price paid over the build period of 18–36 months. Financing these payments requires specialist facilities that bridge the period between PDP obligations and the delivery finance that covers the balance.
PDP finance is available from specialist aviation lenders and some major banks. The facility typically bridges the PDP schedule - advancing funds as each stage payment falls due - with the PDP loan rolled into the main delivery finance facility on completion of the transaction. The lender takes security over the purchase agreement and the operator's rights to take delivery of the aircraft.
PDP finance rates are typically slightly higher than delivery finance rates, reflecting the additional risk of the pre-delivery period (delivery delays, order cancellations, manufacturer insolvency). Operators should ensure their PDP finance facility has appropriate provisions for delivery schedule slippage and force majeure events.
DBF works with lenders experienced in ATR, Embraer, Pilatus and Bombardier PDP schedules. We can structure PDP facilities that provide flexibility for schedule changes while satisfying the lender's security requirements. We can also help you understand the interaction between PDP finance, delivery finance, VAT and duty on delivery.
Key Lenders for This Segment
| Lender | Rate from | Strengths |
|---|---|---|
| Investec | 5.8% p.a. | Specialist aviation, large tickets, strong covenants |
| HSBC | 6.0% p.a. | Global capability, complex structures |
| Close Brothers | 6.1% p.a. | Proven commercial desk, accessible |
| Paragon | 6.9% p.a. | Flexible on complex or unusual structures |
| Shawbrook | 7.2% p.a. | Accessible for newer operators |