DUBAI, Feb 3 (Reuters) - Budget carrier flydubai, which announced an $8.8 billion plane order in November, will look to raise funds through a bond issue next year and is considering the option of sukuk (Islamic bonds), the company’s chief financial officer said on Monday.
“We have not looked at bonds yet but we feel in 2015 we will explore that option and sukuk will certainly be interesting,” Mukesh Sodani said at a conference in Dubai.
“The key is diversification of our financing and that’s why we are interested in sukuk.”
The Dubai-based carrier is aiming for a benchmark-sized offer, funds from which would be used for the company’s general operating expenses as well as to fund some of its aircraft deliveries, Sodani added. The debt market commonly uses “benchmark-sized” to mean at least $500 million.
Flydubai started operations in 2009 following an initial order for 50 Boeing 737-800s. Sodani said 43 of these planes had already been financed.
The state-owned airline has been aggressively expanding its fleet and launching new routes as it looks to compete with other regional low-cost carriers such as Jazeera Airways and Air Arabia.
The carrier, which has launched flights to over 65 destinations so far, ordered a further 100 Boeing 737-MAX jets at the Dubai Air Show last November. Deliveries for these planes will begin in 2017.
Flydubai has been relying on aircraft sale and lease-back arrangements, direct bank loans and other financing options so far to pay for plane deliveries.
It signed a financing deal worth $228 million in November with a combination of international and local banks for six Boeing 737-800 aircraft being delivered in 2013-2014.
Emirates, Dubai’s flagship carrier, has been one of the pioneers in using sukuk to finance aircraft purchases. It issued a $1 billion amortising sukuk in March last year and is expected to conduct more sukuk issuance this year. (Reporting by Praveen Menon; Editing by Andrew Torchia)