Low-cost airline says move is part of plan to access 'most innovative financing structures available' in the market
Dubai-based flydubai on Monday announced that it has closed two new financing structures to support the airline’s plan to add Boeing 737 MAX 8 aircraft into its growing fleet.
The airline said it used a Japanese Operating Lease with a Call Option (JOLCO) and an Aircraft Finance Insurance Consortium (AFIC) insured debt financing structure.
In 2017, the JOLCO structure was used to finance one aircraft and the AFIC structure financed a total of three aircraft. flydubai has received five Boeing 737 MAX 8 aircraft and is due to receive a further aircraft by the end of the year. 7
It has a further 70 Boeing 737 MAX aircraft due for delivery by 2023 and at the Dubai Airshow held in November, flydubai announced a commitment to a $27 billion order for 225 Boeing 737 MAX aircraft.
The airline added in a statement that the JOLCO and AFIC structures allow it to further diversify its funding sources and source funding for its fleet.
The JOLCO funding structure comprises equity participation from local Japanese entities with the balance coming in the form of bank debt. This constitutes a new financing source for the airline. Credit Agricole acted as overall JOLCO arranger and debt underwriter.
Ghaith Al Ghaith, CEO at flydubai, said: “With more than 70 aircraft to join our fleet by 2023 this marks the first time that flydubai has accessed financing models of this kind and reflects our desire to access the most innovative financing structures available in the market.”
With respect to the AFIC structure, Marsh, a global leader in insurance brokerage and innovative risk management solutions, served as broker and the insurance was provided by a consortium of four leading global insurance companies - Allianz, Axis Capital, Fidelis and Sompo International.
Arbind Kumar, senior vice president, finance at flydubai, said: This is the next step in flydubai’s evolution of its financing structures and we will continue to consider new financing structures at competitive pricing levels that support the needs of the airline.”