Dubai’s renowned airline Emirates is seeking to fund its purchase of Airbus A380. According to sources who wished not to be named and who have the knowledge of this, the funds raised would be around $2.5 billion.
According to the Bloomberg, The Dubai government-owned carrier plans an 18-month bridge loan priced at about 135 basis points over the London Interbank Offered Rate, said the people, asking not to be identified because the information is private. The bridge facility will later be converted to a 12-year loan to fund about 10 A380s, which will be delivered before the year end, one of the people said.
Emirates is expected to take further delivery of 21 additional A380s by March 2017. The airline has made Dubai its global airline hub for transcontinental traffic between Europe, US and Asia.
Profit surged 50% in the financial year ended March 31 to 8.2 billion dirhams ($2.2 billion) as it carried more passengers and benefited from a decline in oil prices. The funding for the planes is a combination of operating and financial leases, according to one of the people.
The airline is seeking short-term financing due to the lack of funding from the European export credit agency, although that is expected to become available over the next six to 12 months, the report said. ECA-backed funding will replace the bridge facility when it is available, and some of the lenders will be repaid, the airline’s spokesperson said.
“Emirates has received financing offers for all our new aircraft deliveries for the financial year 2016 and 2017,” an Emirates spokeswoman stated in an e-mailed response to questions from Bloomberg. “As part of our financing strategy, we continue to engage with various institutions for the funding of our future aircraft fleet, to diversify our sources of financing.”
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