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flydubai uses new structures to finance its fleet of MAX aircraft

Dubai-based flydubai, today announced, that it has closed two new financing structures

Dubai-based flydubai, today announced, that it has closed two new financing structures: a Japanese Operating Lease with a Call Option (JOLCO) and an Aircraft Finance Insurance Consortium (AFIC) insured debt financing structure, to support the airline’s strategy of integrating the Boeing 737 MAX 8 aircraft into its growing fleet. This was the first time a JOLCO transaction financed this aircraft type. In addition, the AFIC transaction marks the first time that this product has been used in the region.

The JOLCO and AFIC structures allow flydubai to further diversify its funding sources and efficiently source funding for its fleet. The JOLCO funding structure comprises of equity participation from local Japanese entities with the balance coming in the form of bank debt. This constitutes a brand-new financing source for the airline with a high advance rate typical of a combined debt and equity facility.  Credit Agricole (CA-CIB) acted as overall JOLCO arranger and debt underwriter.

Ghaith Al Ghaith, Chief Executive Officer at flydubai, said: “with more than 70 aircraft to join our fleet by 2023 this marks the first time that flydubai has accessed financing models of this kind and reflects our desire to access the most innovative financing structures available in the market.”

With respect to the AFIC structure, Marsh, a global leader in insurance brokerage and innovative risk management solutions, served as broker and the insurance was provided by a consortium of four leading global insurance companies: Allianz, Axis Capital, Fidelis and Sompo International. The consortium provides AFIC non-payment insurance (ANPI), designed for banks and capital market investors that are funding new aircraft purchases from Boeing.  Sumitomo Mitsui Banking Corporation (SMBC) provided the debt financing for flydubai against the AFIC insurance policy. The AFIC financing structure is fast gaining credibility as an innovative product providing the airline with yet another alternative source of funding.

Arbind Kumar, Senior Vice President, Finance at flydubai, said: “we have previously sought sale and leaseback, commercial debt financing and in 2014 we issued our first Sukuk.  This is the next step in flydubai’s evolution of its financing structures and we will continue to consider new financing structures at competitive pricing levels that support the needs of the airline. We thank our partners and appreciate this validation of the airline’s strategic growth story.”

In 2017, the JOLCO structure was used to finance one aircraft and the AFIC structure financed a total of three aircraft. flydubai has received five Boeing 737 MAX 8 aircraft and is due to receive a further aircraft by the end of the year. It has a further 70 Boeing 737 MAX aircraft due for delivery by 2023 and at the Dubai Airshow held in November 2017, flydubai announced a commitment to a US$27 billion order for 225 Boeing 737 MAX aircraft.

About flydubai

From its home in Dubai, flydubai has created a network of more than 90 destinations served by a fleet of 54 aircraft. Since commencing operations in June 2009, flydubai has been committed to removing barriers to travel, creating free flows of trade and tourism and enhancing connectivity between different cultures across its ever-expanding network.

 flydubai has marked its journey with a number of milestones:

 An expanding network: Created a network of more than 95 destinations in 50 countries across Africa, Central Asia, the Caucasus, Central and South-East Europe, the GCC and the Middle East, and the Indian Subcontinent.
Serving underserved markets: Opened more than 70 new routes that did not previously have direct air links to Dubai or were not served by a UAE national carrier from Dubai. 
An efficient single fleet-type: Operates a single fleet-type of 54 Boeing 737 aircraft and includes: 36 Next-Generation Boeing 737-800, 15 Boeing 737 MAX 8 and 3 Boeing 737 MAX 9 aircraft.
Enhancing connectivity: Carried more than 75 million passengers since it began operations in 2009.

For all our latest news, please visit the flydubai Newsroom.

flydubai
Dubai Aviation Corporation, trading as “flydubai”,
Dubai International Airport,
PO Box 353,
Dubai,
UAE

The numbers listed here are for members of the media only. For enquiries relating to your booking, please telephone the Call Centre on (+971) 600 544 445.

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