Emirates Completes Us $2.6 Billion A330 Financing

Published: Wed 24 Sep 2003 10:09 AM
Emirates Completes Us $2.6 Billion A330 Financing
DUBAI, UAE - With the delivery of its 29th -- and last -- Airbus A330 due later this week, Emirates has completed the massive US$2.6 billion financing programme needed to finance this ultra-modern fleet.
His Highness Sheikh Ahmed bin Saeed Al-Maktoum, Emirates Group Chairman, said: "Since our first A330 was delivered more than four years ago, in March 1999, it has proved to be a top-class workhorse -- highly popular with customers and extremely efficient and reliable to operate."
The money required came from a wide range of regional and international sources, including conventional export credit agency and commercial asset-backed debt, and non-conventional sources, such as Islamic funding and equity from Japanese investors.
Dermot Mannion, President, Emirates Group Support Services, said: "We have access to a choice of sophisticated financing structures which rank with the very best in the industry. Dubai's ambitions to win its place as a top-class international financial capital with the creation of the Dubai International Finance Centre will bring new financing opportunities in years to come."
Emirates' excellence in financing has won it many awards from international financial publications, including Euromoney and Transport Finance. The highlight was the Global Treasury Team - 2002 award, in New York, by leading industry publication Air Finance Journal.
Nearly half the money (some US$1.17 billion, or 46%) came from international financial institutions using export credit agency backed debt. Riyaz Peermohamed, Senior Vice President Corporate Treasury explained: "This underlines the confidence the international financial community has in us, particularly the export credit agencies, and indicates our excellent relations with them."
A significant slice (US$715 million, or 27%) was financed on a commercial debt basis. More than half of this (US$446 million) came from western banks, with the balance of US$269 million raised from regional banks.
"We are happy to note that even in difficult times for the aviation industry, both international and regional banks feel comfortable with financing our aircraft on a commercial asset-backed basis," Mr Peermohamed said.
Notably, some 15% (US$386 million) was generated using Islamic funding, a new and fast-growing source of finance, allowing Emirates to acquire five of the A330s.
Mr Peermohamed said: "We have excellent relationships with Islamic banks and look forward to deepening our links with them, as well as forging new ones. This is a liquid market and we will use this type of financing to fund future aircraft too."
Japanese lessors helped to finance seven A330s using a combination of equity and debt. "This is a huge vote of confidence in the airline, as no other carrier in the world has financed so many wide-body aircraft using Japanese equity," Mr Peermohamed said.
Another three of the 29 Airbuses were financed in Euro and four in UK Sterling Pound, helping to create a natural hedge against some of Emirates' cash receipts from the UK and Euro countries. Eighteen were financed using fixed-rate funding, and the other eleven on a floating basis.
Emirates has taken a balanced approach towards managing interest rate exposure and about 45% of its overall debt and operating leases are on a fixed interest rate basis, with the remaining 55% on floating interest rate.
Emirates has one of the youngest fleets of any major international scheduled airline - on average just 36 months. With the delivery of its last A330 at the end of this week, its fleet will include 29 Airbus A330s, 20 Boeing 777s, three Boeing 747 freighters and one Airbus A310.
Its current order book includes 45 of the mighty 555-seat Airbus A380s which enter service in 2006, as well as 26 Boeing 777s, 20 Airbus A340-600s and eight Airbus A340-500s with a combined total value in outstanding orders of some US$26 billion.

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