Dubai’s Emirates airline plans to lease new Airbus A380 Superjumbo aircraft from a finance company that will issue $630 million of bond-type certificates to fund the purchase of the planes.
Emirates, one of the world’s fastest-growing airlines, has been diversifying its funding strategy to expand its fleet and compete with regional peers such as Etihad Airways and Qatar Airways.
The Gulf carrier signed a similar lease deal worth $587.5m in June last year.
Citigroup Inc, Goldman Sachs Group and Morgan Stanley have been hired as book runners on $630m of enhanced equipment trust certificates (EETCs) issued by DNA Alpha Ltd (Doric) to finance the latest aircraft deal.
An EETC is a financial security through which the airline assumes ownership of the planes on maturity of the certificates. The transactions are similar to secured debt financing such as mortgages.
The certificates will be offered to qualified institutional investors in the United States. Pricing is expected on Thursday, according to IFR Markets, a unit of Thomson Reuters.
The proceeds will be used to finance the acquisition of four Airbus A380s, lead arrangers said.
Aircraft leasing company Doric, considerably smaller than industry leaders such as GECAS and International Lease Finance Corp, signed an $8 billion deal at the Paris Air Show this month to buy 20 A380s.
Doric, the world’s 11th-biggest aircraft lessor overall, has been involved in a number of transactions with Emirates and Singapore Airlines, pushing it to the third spot for leasing of wide-body aircraft.
Under the new issue, $462m of Class A notes will carry a final maturity of 9.9 years and an average life of 5.7 years, while the $168m Class B notes are expected to mature in 6.4 years with an average life of 3.8 years.