About 40 banks have expressed interest in financing the Government’s largest Private Finance Initiative (PFI) project. The £13 billion Air Tanker project will build and maintain refuelling aircraft for the RAF over the next 27 years.
The Air Tanker consortium, led by EADS, the Airbus owner, wants to raise £2 billion from the City to help to build the fleet.
Last week, banks and institutions met the Air Tanker team, the RAF and Deutsche Bank, which is advising the consortium. The meeting, held at the law firm Clifford Chance in London, heard how the consortium plans to finance the PFI deal.
The banks will now make offers to Deutsche Bank and Air Tanker detailing how much they are willing to lend and at what cost.
The RAF’s fleet of VC10s and Tristar refuelling aircraft is about 40 years old, unreliable and expensive to operate. A committee of MPs said last week that the RAF’s transport and refuelling aircraft could complete only half their missions because of reliability problems. The Ministry of Defence has identified new tankers and transporters as the RAF’s highest priority.
Advertisement
Sources close to the Air Tanker negotiations believe that the £2 billion loan will be oversubscribed. Deutsche Bank has reduced an early shortlist of 70 banks to about 40.
Under the terms of the PFI deal, the Government will pay Air Tanker to supply 14 refuelling aircraft. It will be the consortium’s responsibility to guarantee their availability.
Air Tanker is owned by EADS (40 per cent), Rolls-Royce (20 per cent), Cobham (13 per cent), Thales UK (13 per cent) and VT Group (13 per cent).