GPA close to deal on further cancellations

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The Independent Online
(First Edition)

GPA, the financially stretched aircraft leasing group, is close to reaching agreement with its suppliers to cancel or defer deliveries of a further substantial number of aircraft, writes Michael Harrison. .

The accord could result in GPA being allowed to delay deliveries of up to 85 aircraft in the near-term and in effect cancel other aircraft due for delivery later in the decade by making them 'subject to reconfirmation'.

GPA has already reached agreement in principle with its manufacturers, among them Boeing and the European Airbus consortium, to reduce its long-term order commitments by dollars 5bn (pounds 3.2bn).

The latest negotiations, expected to be concluded in January, could result in GPA cancelling orders for up to 20 of the 39 Airbus A330/A340 aircraft on order. Boeing, which had provisionally agreed to defer deliveries of 38 aircraft, is thought to have lifted that figure to 65.

Delays in reaching agreement on the precise number of aircraft to be cancelled or deferred, and the penalty payments GPA woud incur, have been holding up the other elements of the group's refinancing following the flop of its dollars 1bn share offer last summer.

An accord with the manufacturers should allow GPA to proceed with plans for a dollars 750m aircraft securitisation programme and a dollars 350m share issue to existing shareholders.

Before its public offer, GPA had 308 aircraft worth dollars 11.9bn on firm order - of which 142 aircraft valued at dollars 4.9bn were due for delivery in 1993 and 1994. Its outstanding order book is now put at about dollars 5bn.