Emirates, the world’s biggest airline by international passenger traffic, said it needs about $5 billion in the year starting April to pay for planes.
The money will be raised from “a mixture of all the sources we have considered in the past, so commercial bank, operating leases, some export credits,” Brian Jeffery, senior vice president for corporate treasury, said today as the carrier’s Islamic bonds listed on Nasdaq Dubai.
Dubai government-owned Emirates, which begins its fiscal year on April 1, has raised $1.75 billion from the sale of sukuk and bonds over the past two months. “Whether we do any more is not certain of course, but compared to the past few years, we have already started to do more capital markets transactions because of the conditions of the markets,” Jeffery said.
Dubai-based issuers are tapping the debt market after the city’s credit risk tumbled almost nine times more than Middle East peers in the past year. The government raised $1.25 billion in January, including $500 million of its first 30-year bonds. Emirates had 223 planes on order at the end of March 2012, and the carrier is the biggest operator of the Airbus A380 and Boeing 777 models, according to its annual report.
The airline will take deliveries of 20 planes valued at $4.2 billion in 2013, it said in an e-mailed statement today, as passenger traffic through Dubai’s airport grows. The airport reported a 15 percent jump in traffic in January to a record 5.56 million, according to data released last month.
The company raised $1 billion from the sale of 10-year amortizing Islamic bonds this month at a profit rate of 3.875 percent, according to data compiled by Bloomberg. The notes were yielding 4.01 percent at 1:14 p.m. in Dubai today, according to data compiled by Bloomberg. In January, Emirates sold $750 million of 12-year amortizing bonds at a coupon of 4.5 percent.
Emirates is unlikely to borrow in currencies other than U.S. dollars and dirhams to avoid taking on the volatility associated with financing in different foreign currencies, Jeffery said.