Thursday, September 29, 2011

Emirates eyes new jets to replace older aircraft. Airline plans $1b bond issue as it diversifies funding options

Dubai: Emirates could announce further aircraft orders at this year's Dubai Air Show as it seeks to speed replacement of older planes and add routes to poorly served destinations.

Shaikh Ahmad Bin Saeed Al Maktoum, President of Dubai Civil Aviation and Chairman and CEO of Emirates airline and Group, was "reflecting a wish that we'd like to do more" when he said on Wednesday that the carrier could add to its jetliner backlog, President Tim Clark said yesterday in a phone interview.

The airline wants to accelerate the retirement of older jets because of high fuel prices, and also needs extra planes to offer services to less busy destinations to make use of gaps between periods of high activity, the executive said.

Models being examined include the Airbus A350 and extended-range versions of Boeing's older 777, Clark said, adding that Emirates is also seeking an update on the US company's plans for a "next-generation" 777.

While more A380 superjumbos would be welcome, he said, the fleet is restricted by handling limitations at Dubai International Airport.

Clark said that Emirates is in discussion with Airbus over the implications of likely delays to the A350-1000 variant as the plane is given extra thrust, adding that he'd have liked the jet to have gone ahead according to original plans.

He added that there's no reason to expect first examples of the baseline A350-900 to meet weight and specifications, given problems with other recent jetliner models.

Bond issue

Emirates airline is also planning to issue $1 billion (Dh3.67 billion) in bonds, a senior official was quoted as saying yesteday, to counter uncertainty about financing as European banks struggle.

Brian Jeffrey, senior vice-president of corporate treasury, told the Arabic language daily Al Bayan, that the airline was considering the new bonds to finance aircraft purchases, given funding challenges faced by European banks.

Emirates, which issued a $1 billion bond in June, said diversifying funding options is always on the table.

"Emirates is always open to new financing opportunities as part of our overall diversified funding strategy. At this time we have no firm plans to release a new bond," the airline said in an emailed statement.

The global aviation industry faces growing uncertainty over financing due to Europe's debt crisis and worries surrounding French banks, which play a key role in the global aircraft financing market.

Emirates last tapped the bond market with a five-year 5.125 per cent issue in June which was massively oversubscribed.

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