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KUALA LUMPUR (Reuters) - Loss-making Malaysian Airline System Bhd MASM.KL (MAS) has secured a state-backed Islamic bond facility to raise up to 5.3 billion ringgit ($1.73 billion) for the purchase of eight new widebody aircraft made by EADS's EAD.PA Airbus.
The state-guaranteed bond was established through Turus Pesawat Sdn Bhd, a special-purpose vehicle owned by the ministry of finance, MAS said in a statement on Tuesday.
MAS has been struggling to remain competitive due to an ageing fleet, rising fuel costs and competition from low-cost carriers such as AirAsia Bhd (AIRA.KL).
Funds raised will go towards the acquisition of six Airbus A380s and two A330s, said MAS. Notes issued under the bond will have a tenure of up to 20 years.
The company has two outstanding bonds. It sold 1 billion ringgit of Islamic bonds without a fixed maturity through a private placement in June, when it also issued a 500 million-ringgit Islamic bond. ($1=3.0630 Malaysian ringgits)
Reporting by Al-Zaquan Amer Hamzah; Editing by Greg Mahlich