In the aeronautics sector, transactions are mostly done in dollars, even when the companies are European. This currency is required internationally for aircraft payments, purchases of new and second-hand aircraft, payments to lessors and engine manufacturers, invoicing of maintenance operations… This is why the recent arrangement reached between Air France-KLM and Airbus is particularly rare. According to information from The gallery, Friday, May 20, the first will pay in euros for the planes it has ordered in recent months from the global aircraft manufacturer. Which almost never happens.
And for good reason, the planes ordered are normally paid for at the time of their delivery, recalls La Tribune. The time between these two operations can be very long, the risk of a devaluation of the national currency against the greenback is quite significant. This is why airlines generally take out cover with financial institutions to deal with exchange rate risk. This is currently the case for the euro, which has been falling against the dollar for three months. In this context, Air France-KLM hedged €1.95 billion at the end of December 2021, out of just over €2 billion in investments scheduled for 2022, reports La Tribune.
