Mideast doubles investment in Boeing planes
Dubai, September 24, 2012
Financial institutions and airlines in the Middle East have significantly increased their capital investments in new Boeing commercial airplanes over the past two years, Boeing executives said.
Executives from Boeing Capital Corporation (BCC), the manufacturer’s product financing arm, told attendees at its annual financiers and investors conference for the Middle East, Africa and South Asia region, that capital to support its deliveries to the region’s carriers has nearly doubled since 2011.
Boeing’s 2012 update to its long-term aviation market outlook projects a $4.5 trillion global market for new aircraft over the next 20 years, with a significant increase in aircraft demand over that time. Of those, the Middle East region is expected to require 2,370 aircraft, worth about $470 billion, he said.
“The region historically has seen about 20 percent of its deliveries funded by its own capital sources. That turned up to more than 30 percent in 2011, and, for 2012, it’s heading to nearly 60 percent,” said Rich Hammond, a BCC senior director in the region and an event co-host. “Investors here are acutely aware that our commercial airplanes are great assets, and the growing demand for new and replacement aircraft is genuine.”
Boeing said the region’s increased interest in aircraft investment is helping offset lower contributions by Europe’s commercial banks, long a major source for aircraft lending but recently challenged by Europe’s continuing sovereign debt crisis.
“Financiers in the Middle East are seeing their businesses mature as they build their aviation financing teams and find newer capital sources to draw on,” Hammond said.
The long-anticipated growth of Islamic financing’s role in commercial airplane deliveries is also coming to fruition. Airplanes have been regarded as ideal for lending under Shariah law given their mobile nature and asset attractiveness, he said.
This year (2012) has seen several landmark Islamic financing deals involving commercial aircraft. Notably Emirates Airways mandated more than $500 million in a 12-year financing deal arranged by three UAE banks – Dubai Islamic (as lead arranger), Al Hilal and Ajman. Also, in one case in the region, competitive Islamic pricing was also able to take out a conventional bank financing deal.
“Commercial aircraft are demonstrating their attractiveness to astute Islamic investors,” Hammond said. ”Islamic financing is established as a financing element for several of our customers, and we expect that to continue as its pricing becomes more competitive and loan tenors increase. It’s a unique niche for aircraft financing, but we’re seeing it grow, and it does work.”
Boeing’s 2012 update to its long-term aviation market outlook projects a $4.5 trillion global market for new aircraft over the next 20 years, with a significant increase in aircraft demand over that time. Of those, the Middle East region is expected to require 2,370 aircraft, worth about $470 billion, he said. – TradeArabia News Service
More Travel, Tourism & Hospitality Stories
- Air Arabia opens new sales office in Bahrain
- Lufthansa aims high with 'First Class' service
- Emirates launches new service to Boston
- Dubai Airports 'powers down' for green initiative
- City Seasons opens 5-star hotel in Abu Dhabi
- Etihad alert on fog
- Bahrain F1 visa procedures issued
- Oman Air appoints GSA for Turkey
- $40bn investment in Gulf airports likely
- Celebrity chef to open restaurant at InterContinental
- FRHI appoints wellness vice president
- Dubai, Abu Dhabi hotels top performance
- Malaysia Airlines jet presumed crashed, 239 onboard
- BA rolls out special Mother's Day fares
- Etihad says majority of stranded passengers sent home
- Malaysian jet search team spots 'column of smoke'
- Turkish Airlines revenue surges 27pc in 2013
- GCC airlines defend female cabin crew policies
- Malaysian flight 'presumed crashed' over China
- Qatar Airways likely to buy more A380s
- Malaysia Airlines jet goes missing over China
- Etihad in move to clear flights backlog
- Tourism industry emerges from downturn
- Airbus orders more frequent A380 checks
- Dubai Mall stand offers air safety tips
- Elaf Group plans new hotel in Makkah
- UPDATE: Abu Dhabi airport starts operation
- Qatar Airways mulls options on 3 extra A380s
- RAK features 9 travel firms at ITB Berlin
- Etihad names Patrick Vieira guest ambassador