Aircraft financing not a problem, says CEO of flydubai
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.”