asked the Minister for Tourism and Transport if he will give details of the figure of £89.76 million for air companies listed in the Public Capital Programme; the rate of interest at which such air companies can borrow with the aid of a State guarantee; and the way in which this compares with the best current rate for borrowing on the open market as indicated by the Central Bank.
Written Answers. - Air Companies' Financing.
44.
The provision in the 1989 Public Capital Programme for capital expenditure of £89.76 million by Aer Lingus is made up as follows:
|
IR£M |
|
|
Fleet Replacement |
63.01 |
|
Airline — Major Projects |
13.00 |
|
Airline — General Capital Expenditure |
3.00 |
|
Airline Related Activities and Irish subsidiaries |
10.75 |
|
89.76 |
The capital expenditure described above will be financed generally from a combination of net profits after tax, non-cash charges, mainly depreciation and disposal of old aircraft and other surplus assets as well as borrowings. No equity is being provided by the Government for this purpose. The rate of interest on borrowings would depend on the currencies in which each loan is transacted. In this regard, Aer Lingus borrows in the most favourable currencies allowing for any exchange risks involved. Accordingly, is not possible to be precise about the advantage of borrowing with a State guarantee over borrowing without a State guarantee until such time as a specific proposal to borrow is being considered. Aer Lingus advises that the differential could be as low as one eighth per cent. Aer Lingus is not proposing, however, to make use of State guarantees for its borrowings.