Global law firm K&L Gates has advised leading international bank Crédit Agricole CIB in providing Southeast Asia’s first-ever sustainability-linked loan (SLL) to a low-cost carrier. The aircraft will be operated by Cebu Pacific, a Philippines-based low-cost carrier. The airline completed a Japanese operating lease with call option (JOLCO) for a new Airbus A321neo aircraft, which was delivered in December 2024.
The SLL structure, designed by Crédit Agricole CIB, incorporates carbon emissions intensity reduction targets that will reward Cebu Pacific if met. The airline is moving to an all-neo fleet by 2028, which will contribute to its carbon intensity reduction targets. The Airbus A321neo is more fuel-efficient than earlier models, which should help the carrier make substantial progress towards reducing its carbon emissions.
Crédit Agricole CIB Head of Aviation Group Asia-Pacific, Bertrand Rovetto, stated “We are delighted to have been selected by Cebu Pacific to structure their first sustainability-linked aircraft financing. Crédit Agricole CIB is a pioneer in sustainable finance and as we are committed to supporting our clients in their decarbonisation efforts, we have built-in a financial incentive mechanism rewarding the airline’s progress towards their net zero ambition. We hope this is the first of many more sustainability-linked centered collaborations with Cebu Pacific.”
The deal team was led by Singapore Finance partner Duc Nguyen with support from Dat Le.
Duc stated: “We congratulate our client CACIB for concluding this milestone transaction through devising innovative financing mechanisms that reward sustainable business practices. Sustainability-linked financial products are emerging as a transformative trend in the aviation sector, and we are delighted to be part of this significant step forward.”
The firm’s Aviation Finance practice represents financial institutions and leasing companies around the globe in connection with aircraft finance and leasing transactions, including the structuring, documenting, and negotiating of aircraft finance transactions and cross-border transactions involving multiple jurisdictions. The team works closely with their colleagues in the tax, regulatory, and litigation support practice groups in order to advise and assist financial institutions, leasing companies, and airlines on a variety of aviation matters.
