El Al Israel Airlines will receive a $40 million loan from Boeing Capital Corp on condition the airline signs an accord by year-end to lease two Boeing 787 jets or alternatively buy one or more 787s.
A year ago, El Al signed an agreement with Boeing to buy four 737-900 jets with an option for another four.
El Al Chief Financial Officer Nissim Malki said on Thursday the airline had decided to exercise two of the options, with the cost for all six 737s estimated at $300 million to $320 million, Reuters reports.
The first four will be delivered between October 2013 and March 2015 and will replace aging 757 aircraft in El Al’s fleet. The new planes are due to be delivered in October 2015 and February 2016.
In addition El Al, which operates an all-Boeing fleet, is in the process of phasing out some wide-body 767 and 747 jets.
“Since we have opened a dialogue with Airbus for wide-body aircraft, we agreed with Boeing that if by end of 2012 we would be in a position that we might order Airbus, then we would have to prepay the loan and in our discussions with Airbus everything is clear,” Malki told Reuters.
If El Al opts for wide-body aircraft from EADS unit Airbus instead of Boeing, Malki said the A330 would be the best candidate to replace Boeing 767s.
“At a later stage, when the Airbus A350 is available, that would probably be the best candidate to replace the old 747s,” he said.
For the Boeing loan, El Al will put up as collateral a 777-200ER jet it acquired in 2002. The eight-year loan will be taken in two parts – $30 million will be available in July 2012 and the rest in July 2014.