Flydubai looking to raise funds with Islamic bonds

Flydubai will look to raise funds through a bond issue next year and is considering the option of, sukuk, Islamic bonds, reports Reuters.
Time Aerospace thumbnail

Flydubai’s chief financial officer Mukesh Sodani said: "We have not looked at bonds yet but we feel in 2015 we will explore that option and sukuk will certainly be interesting. The key is diversification of our financing and that's why we are interested in it."

Analyst Saj Ahmad commented: “That flydubai is looking at sukuk for its future financing needs is not that great a surprise. The airline has heeded lessons from its sister airline Emirates in accessing new liquidity and sukuks for them have worked exceptionally well, despite Emirates sitting atop a cash reserve of almost $5bn.” 

Ahmad added: “flydubai has used other methods to finance its fleet of 737-800s (such as sale-and-leasebacks), but with their big order for 737MAXs, they'll have to start putting down pre-delivery payments on them and the other 11 additional 737-800s it has on order within the next couple of years so it makes sense to look to secure this financing now rather than later when bond yields could affect their ability to harness funds.”