IATA WELCOMES NEW CAPE TOWN CONVENTION TO FACILITATE FINANCING AND LEASING OF AIRCRAFT

"This new treaty comes at a particularly opportune time, given the serious financial problems currently faced by airlines around the world," said IATA Director General and CEO Pierre Jeanniot, today.

Jeanniot referred to the Convention adopted in Cape Town at an intergovernmental diplomatic conference which will help lower the costs of securing aircraft and engines in states which become parties. The Cape Town Convention is the product of a decade of efforts and the result of close collaboration between governments and the aviation industry.

"IATA has been actively involved in this for the past four years," continued Jeanniot. "It is a testimony to what can be achieved in the context of public-private partnership."

Despite the current global economic slowdown, manufacturers anticipate that some USD 1,200 billion of aircraft and engines will be ordered in the next twenty years. According to an independent economic study, commissioned by IATA, aerospace manufacturers and ICAO, wide-spread acceptance of the new treaty can lead to savings for airlines of several billion dollars per year in financial and transaction costs.

Lorne Clark, IATA chief delegate to the Cape Town conference, noted "Delegates from nearly 70 countries and a number of industry organisations rolled up their sleeves and negotiated day and night for nearly three weeks to meet the 16 November deadline for adoption of the new treaty. This cooperative effort sends a strong signal that, working together, governments and the industry are determined to revive our industry for the benefit of the travelling public and of the world’s economies."

The Cape Town Convention provides for a new "international interest" to be created in aircraft and engines and filed in a new International Registry. This will reduce the risk for lenders and lessors and the cost to purchasers and lessees. Major export credit agencies have already agreed that the costs of borrowing will be reduced to airlines and countries signing the new treaty. IATA anticipates that the Cape Town Convention will come into force before the end of 2002.