Emirates, Investec ink $1bn aircraft financing deal

Investec says to finance four A380s through sale-and-leaseback arrangement
Emirates, Investec ink $1bn aircraft financing deal
By Staff writer
Mon 09 May 2016 10:52 AM

Emirates has agreed a $1 billion deal with Investec Bank’s aviation arm to finance four A380 jets through a sale-and-leaseback arrangement.

The deal is Investec Bank’s first foray into financing the Airbus Group SE A380 superjumbo, the bank said in a statement to media.

Under the deal, Investec will pay a total of $1 billion to purchase four double-decker aircraft operated by Emirates – two of which are new and owned by Emirates, the other two of which are to be bought from Aviation Finance Co’s Stellwagen Finance – before leasing them back to the airline.

London-based Investec already finances single-aisle and smaller twin-aisle aircraft built by Airbus and Boeing, according to Bloomberg, which reported that the bank plans to own the A380s for 12 years before selling them on the secondary market.

Alok Wadhawan, co-head of Investec Aviation Finance, told Bloomberg: “Aircraft are dollar assets, and investors want dollar exposure.

“And you get steady returns, the assets are mobile, and the security collateral is strong. It also helps that most airlines these days are profitable.”

Interest in aircraft purchases among banks has risen as yields from more traditional assets struggle to recover to post-recession levels, while the price of oil has boosted airline earnings, Bloomberg added.

“It’s the structure of the deal and the residual risk at the back end that made this attractive,” Wadhawan was quoted as saying. 

Nirmal Govindadas, Emirates’ senior vice-president, corporate treasury, said: “Emirates’ clear long-term financing strategy and our solid reputation in the financial community enables us to secure funding in the global market to grow our fleet of wide-bodied aircraft.

“We are pleased to close the sale and lease back agreement for four A380s with Investec Aviation Finance, and we will continue to tap into innovative funding opportunities, maintaining our well-diversified financing portfolio to support our growing fleet.”

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