Emirates raising Dh1.9b for new jets

Emirates airline is in the process of raising Dh1.9 billion ($517 million) in Islamic funding to finance three aircraft. In an e-mailed statement to Gulf News yesterday, the carrier's spokesperson said that Emirates has mandated a 12-year Islamic lease (Ijara) financing worth Dh1.9 billion to a local consortium led by Dubai Islamic Bank. The airline has hired three banks to arrange the transaction. "Dubai Islamic Bank is the coordinating bank and a mandated lead arranger. Al Hilal Bank and Ajman Bank are also mandated lead arrangers," the airline's spokesperson said, adding that the banks were mandated last month. The financing, meanwhile, is for a total of three aircraft — a combination of Boeing 777-300ERs and Airbus A380s, according to Emirates. "The aircraft will be delivered between February and October 2012," the spokesperson said. Massive order The Arab world's largest carrier and largest customer for the Airbus A380 superjumbo, placed an order for 50 Boeing 777-300ERs at the Dubai Airshow last year in a deal worth $18 billion at list prices, with deliveries expected to kick off in 2015. Emirates also took options on 20 more 777s worth $8 billion, taking the total order to $26 billion. Further, the paperwork for the deal is expected to be completed by the end of the month, Reuters reported yesterday, quoting Mohammad Berro, CEO of Abu Dhabi-based Al Hilal Bank. At a time when sources of finance are less available globally amid the European and US economic woes, Emirates does have a large financing portfolio, Peter Morris, chief economist at UK-based aviation consultancy Ascend, said. "However, its profitability and growth prospects put it towards the top of the queue in most people's eyes," he told Gulf News when asked if the carrier would find it difficult to raise finance for future aircraft deliveries. Another analyst, Andrew Charlton, managing director of the Europe-based strategic advisory, government and public affairs firm Aviation Advocacy, says that finding finance is not a big problem for Emirates at the moment. "They have a very positive story, good record and good prospects. That is not to say that in the current, particularly European, situation, banks are reviewing their exposure by sector," he told Gulf News, adding that Emirates is well advised to find finance from a variety of sources, including Gulf and other banks. "That is true at all times, but perhaps the current European situation merely brings that reality into sharper relief. At the same time, we are seeing growing sophistication of the Gulf banking sector in being able to offer finance on high value, mobile assets like aircraft," Charlton said. New deliveries Meanwhile, 2012 will see the Emirates fleet growing at a rapid pace with the carrier averaging close to three deliveries per month, including a mix of A380s and Boeing 777s, Adnan Kazim, Emirates divisional senior vice-president for planning and research, recently told Gulf News. "The airline has been receiving an average one aircraft per month," he said. He added that the airline received 18 new aircraft in the 2011 calendar year, including 16 passenger aircraft (five A380s, 11 B777-300ERs) and two freighters. "Financing of aircraft will be a requirement for Emirates, given the fleet expansion plans they have. That is not the same as it being a problem. "Finance is available, as a general comment, if the borrower is sound and can assure the lender that the money is safe," Charlton of Aviation Advocacy said. Discount on fares Emirates said yesterday it would offer customers discounts of "up to 30 per cent" to select destinations across its network, in a three-day sale. It is valid for booking from February 7 to February 9, the carrier said in a statement, adding that to obtain the offer, outbound travel must commence on or before June 10, 2012. Some of the destinations included in the offer include London, Dallas, Zurich, Beirut, Bangkok, Karachi, Paris and Mumbai, with a number of Emirates' most recent destinations also included in the offer, such as Seattle, Rio de Janeiro and Buenos Aires.