Emirates Completes Landmark Sterling Financing Deal

Emirates has signed a US$190 million landmark aircraft financing agreement in sterling equivalent for the financing of two A330-200 aircraft, one of the largest sterling operating lease financings ever completed for wide-bodied aircraft.

The financing agreement was for the acquisition of the 14th and 15th of 21 Airbus A330-200s, powered by Rolls Royce Trent engines, which the carrier has on firm order. The 14th A330 was delivered in January and the 15th is scheduled for delivery this month (March 2001).

The financing for both aircraft is structured as a 10-year sterling operating lease. The structure was arranged by Babcock and Brown and Singapore Aircraft Leasing Enterprise while the asset finance subsidiary of Halifax plc acted as investor. The lead debt arranger and underwriter was Bankgesellschaft Berlin AG and the other leading banks involved were Standard Chartered Bank, Lombard Bank (part of the Royal Bank of Scotland) and Arab Bank plc.

The debt on these aircraft is financed on a floating rate basis at an average margin of 0.60 per cent over sterling Libor.

Dermot Mannion, Emirates’ Chief Director Finance, IT and Services, said: “This deal for two A330 aircraft, with a prestigious group of banks led by Halifax plc and Bankgesellschaft Berlin AG, is a landmark sterling deal for Emirates and demonstrates the continuing confidence which the international financial markets have in Emirates.

“The Emirates Group returned profits of Dhs447 million for the previous financial year, 1999/2000. During this year, another profitable year of operation is expected, with profits expected to match at least those achieved in the previous year, despite sharply rising fuel prices.

“Emirates’ modernisation and expansion is part of Dubai’s strategy to become an international transportation hub linking Asia with Europe and, eventually, North America.”

Riyaz Peermohamed, Emirates’ Corporate Treasurer said: “We are very pleased to be involved in this sterling deal with Halifax plc which is one of the largest financial institutions in the United Kingdom. In this deal, they have used their solid sterling presence to create a low-cost funding structure for Emirates for two wide-bodied aircraft. This structure provides a natural hedge against a portion of Emirates sterling surpluses generated in the United Kingdom.”

Lindsay Town, Managing Director of Halifax Asset Finance Limited said: “We are delighted to have provided two wide bodied aircraft for Emirates. The transaction demonstrates our commitment to the aircraft finance market and we look forward to developing further our important relationship with Emirates.”

Andrew Stockham, Head of Aerospace Finance, from Bank Gesellschaft Berlin AG commented: “We are thrilled that Emirates chose us to lead this financing and particularly grateful to be involved with this deal, which is a landmark development. We look forward to working with Emirates in the future”.

In addition to the 21 A330-200 aircraft on firm order, Emirates has also on order seven B777-300s and six long-range A340-500 aircraft. Emirates also has options on a further three A330-200s and ten A340-500 aircraft. Emirates became the first airline to sign a firm commitment for the world’s largest airliner, the A380 aircraft, commiting to five passenger and two freighter versions, the first of which will be delivered by 2006.