The European Investment Bank (EIB), the European Union's long-term financing institution, announces two loans totalling USD 160 million (ESP 25 billion)(1) for the purpose of modernising IBERIA's passenger fleet.

In fact, this financing comprises the initial instalments of a larger facility worth USD 475 million (ESP 76 billion) in all extended by the EIB towards renewal of IBERIA's fleet. The funds will be used to purchase Airbus A340-300 and A320-200 aircraft, to replace the airline's older DC 10s, DC 9s and B 727s. The new aircraft, scheduled for delivery before the end of this year or in 2000, offer advantages for the environment in terms of very low noise and atmospheric pollution levels. They will also consume considerably less fuel than the aircraft they are replacing. In modernising its fleet, IBERIA will enhance its profitability and the quality of its service, thereby strengthening the airline's competitive position.

The corresponding purchase contracts have already been signed with two companies set up by IBERIA and AIRBUS specifically for acquisition of one A340 for each company, for subsequent leasing to IBERIA. The EIB's operation is being guaranteed by an international banking syndicate. A similar facility, concluded by the EIB in 1997 for the purchase of another aircraft, was singled out as"air transport deal of the year" by the sector itself.

The EIB was founded in 1958 under the Treaty of Rome, which created the European Economic Community, with the aim of fostering enhanced integration, balanced development and economic and social cohesion in the Member States by providing long-term financing for capital investment furthering attainment of European Union (EU) objectives. It supports viable projects: fostering development of the EU's less favoured regions; targeting construction of trans-European transport, telecoms and energy networks; bolstering the international competitiveness and integration of European industry, particularly SMEs; safeguarding and improving the environment; endowing the EU with secure energy supplies; and promoting health and education facilities. Within certain limits, it also extends financing outside the Union in pursuit of the latter's policy of cooperation with third countries.Owned by the EU Member States, the EIB funds its lending operations through borrowings raised on the capital markets, where its bond issues systematically enjoy the top AAA rating.

(1) EUR 1 = ESP 166.386, GBP 0.647500.