Dubai’s start-up budget airline flydubai has secured $320 million in lease financing from GE Capital Aviation Services for four new Boeing aircraft, a deal that will triple the size of its fleet by the end of the year, the carrier announced on Wednesday.
Flydubai Chief Executive Officer Ghaith Al Ghaith said the “sale and leaseback” agreement would cover the airline’s requirements for the rest of 2009 and would enable it to service 14 planned routes in the region.
The four aircraft are among 50 Boeing 737-800s that flydubai ordered last July at the Farnborough Air Show, in a purchase valued at about $4 billion at list prices. Flydubai took delivery of its first two jetliners in May, and they went into service last month. Of the four 737s to be leased from GECAS, the first two are expected later this month, the third in October and the fourth in December.
“This is a significant deal for flydubai, as it is the first financing that we have secured from outside the UAE,” he said.
“It shows clear confidence from GECAS in the airline and Dubai.”
GE Capital Aviation Services, or GECAS, is one of the world’s largest lessors of commercial aircraft. Doug Winter, its Senior Vice President and Regional Manager for the Middle East, Africa and CIS/Russia, said the flydubai transaction had happened “smoothly” and within a matter of weeks.
“This deal expands our already significant presence in the Middle East market,” Winter said. GECAS agreed earlier to lease 10 Airbus A320s to Saudi Arabian Airlines and stuck a deal with Saudi Arabian low-cost carrier nas air for three Embraer E190s and two E195s.
Under the terms of the sale and leaseback, GECAS will buy each of the next four planes that Boeing delivers to flydubai and then lease it back to the carrier.
The Middle East is one of the world’s few growth markets for passenger jets, and airlines in the region — notably full-service carriers including Emirates Airline and Etihad Airways — continue to expand their fleets in spite of a severe downturn in global aviation. Low-cost carriers have taken off later in the Middle East than in most other parts of the world, but they are growing fast and present an opportunity for aircraft leasing companies.
Al Ghaith told Khaleej Times in late June that flydubai had achieved a higher passenger load factor — a measure of airline productivity — than anticipated in its first three weeks of operations, though he has not provided specifics.
“One month operation isn’t long enough to discuss or analyse in any depth,” Al Ghaith said on Wednesday. “The real test is to continue – and we hope to continue to benefit from – the level of support we have had in the first 30 days. There is no other (financing) deal for the airline for the next six to nine months. Beyond that is too early to discuss.”
Flydubai was established in March 2008 with start-up capital of Dh 250mn. It owns the two planes now in its fleet and flies to four cities in the region.
Source : Khaleej Times
