Dubai-based flydubai has signed an agreement for USD228 million with five regional and international banks to finance six new Boeing 737-800 aircraft. This financing is for two recently delivered aircraft, one more scheduled for delivery by the end of the year and three scheduled to be delivered in the second half of 2014. The five banks which arranged the financing are Norddeutsche Landesbank Girozentrale (NORD/LB), Crédit Agricole Corporate & Investment Bank, Gulf International Bank B.S.C. (GIB), PK AirFinance Japan (GE Capital Aviation Services) and Landesbank Hessen-Thüringen Girozentrale (Helaba).
The commercial bank funding is structured as a finance lease with quarterly loan repayments over a 10 to 12 year term. This was the result of a request for a proposal (RFP) issued by flydubai for its 2013 and 2014 aircraft funding requirements. The funding is attractively priced to the market with an option for the interest rate to be floating or fixed during the term of the loan.
flydubai’s Chief Executive Officer, Ghaith Al Ghaith, said: “In 2012, our third year of operation, we started to diversify our sources of funding. The enthusiastic response to our RFP to source commercial funding is a positive endorsement of our strategy for continuing growth and our track record. We thank the banks for their support and we look forward to strengthening our relationship with them in the future.”
Mukesh Sodani, flydubai’s Chief Financial Officer, added: “We are delighted to have secured commercial funding to finance the acquisition of six new aircraft. Until we started our strategy to diversify our funding sources our aircraft were predominantly financed with operating lessor partners on sale and leaseback structures. Our first step towards diversifying our funding sources was for three Boeing 737-800 aircraft financed through a loan agreement with Export-Import Bank (Ex-Im Bank). With today’s announcement, we have successfully financed the acquisition of 42 aircraft to date, out of our initial order of 50 aircraft placed with Boeing.”
flydubai’s network of more than 65 destinations covers 34 countries in the Middle East, the GCC, Africa, Europe, the Caucasus, Central Asia and the Subcontinent. The network includes more than 46 destinations that did not previously have direct air links to Dubai served by a UAE national carrier. The airline now offers Business Class, as a result of customer feedback, and offers leisure and business travellers a more personalised flying experience to a number of destinations across its network.