DUBAI Feb 3 Budget carrier flydubai, which
announced an $8.8 billion plane order in November, will look to
raise funds through a bond issue next year and is considering
the option of sukuk (Islamic bonds), the company's chief
financial officer said on Monday.
"We have not looked at bonds yet but we feel in 2015 we will
explore that option and sukuk will certainly be interesting,"
Mukesh Sodani said at a conference in Dubai.
"The key is diversification of our financing and that's why
we are interested in sukuk."
The Dubai-based carrier is aiming for a benchmark-sized
offer, funds from which would be used for the company's general
operating expenses as well as to fund some of its aircraft
deliveries, Sodani added. The debt market commonly uses
"benchmark-sized" to mean at least $500 million.
Flydubai started operations in 2009 following an initial
order for 50 Boeing 737-800s. Sodani said 43 of these
planes had already been financed.
The state-owned airline has been aggressively expanding its
fleet and launching new routes as it looks to compete with other
regional low-cost carriers such as Jazeera Airways and
The carrier, which has launched flights to over 65
destinations so far, ordered a further 100 Boeing 737-MAX jets
at the Dubai Air Show last November. Deliveries for these planes
will begin in 2017.
Flydubai has been relying on aircraft sale and lease-back
arrangements, direct bank loans and other financing options so
far to pay for plane deliveries.
It signed a financing deal worth $228 million in November
with a combination of international and local banks for six
Boeing 737-800 aircraft being delivered in 2013-2014.
Emirates, Dubai's flagship carrier, has been one
of the pioneers in using sukuk to finance aircraft purchases. It
issued a $1 billion amortising sukuk in March last year and is
expected to conduct more sukuk issuance this year.
(Reporting by Praveen Menon; Editing by Andrew Torchia)