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Wed 16 Nov 2011 08:17 AM

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Aircraft financing not a problem, says CEO of flydubai

But low-cost airline fears ongoing euro zone crisis may crimp aircraft funding in 2012

Aircraft financing not a problem, says CEO of flydubai
Flydubai chief Ghaith al-Ghaith said the carrier has not struggled to net funding

Low-cost
carrier flydubai has not struggled to fund its fleet expansion but expects financing
to become tighter in 2012 as global lenders shy away from plane deals amid the
euro zone debt crisis.

The
Dubai airline, which on Tuesday announced it had secured financing for two Boeing 737s worth $170m at list price, said the
emirate’s strong aviation industry had helped underpin funding.

“We received
offers for more aircraft than we needed to finance, which is a fantastic
position to be in, especially for such as young airline,” Ghaith Al Ghaith
said. The type of aircraft we are financing is very attractive because the
value is very good.

Two, I
believe that flydubai is gaining a lot of credibility within financial
institutions. The UAE and Dubai-based aviation industry has been very
successful in the past and I think [lenders] look at this and say, this is also
something we want to support.”

But he
warned funding could be difficult next year as global lenders become more risk
averse amid ongoing economic woes. 

“I think
it will change in the future but in the past it has not been a problem for us,”
he said.

Al
Ghaith’s comments follow a week after Emirates Airline announced it would be
looking to the Islamic finance market to fund aircraft deliveries due to
difficulties in Europe. 

“We were
planning for finance from European bank…but it’s a bit difficult now,” Tim
Clark, president of Emirates Airline, told Reuters.

“This
will be new territory for Islamic finance. They [Islamic banks] are a bit
hesitant, but they definitely have the capacity.” 

Flydubai
on Tuesday said it had signed an eight-year sale and leaseback contract worth
$170m with MC Aviation Partners. The airline said it would be approaching
lenders for its 2012 financing requirements. 

The low
cost carrier also announced deals including a $20m contract with Honeywell to
provide maintenance support and two agreements worth a combined $54m with Abu Dhabi Aircraft Technologies for maintenance,
repair and overhaul contracts.

The
airline expects to make a decision on whether it will order the Airbus A320neo
and the Boeing 737 MAX planes next year, Al Ghaith said.

 “There has been much speculation about whether
flydubai will join the party this year and place another order for more
aircraft and there has been much speculation about whether the order will for
737 Max or A320 Neo. We won’t be making any announcements today but we promise
in the very near future we will make a decision.”

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