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Major engine deal may be announced by Emirates today

posted on 08/12/2003: 1830 views



Sheikh Ahmed bin Saeed Al Maktoum, President of Dubai Civil Aviation and Chairman of Emirates group, is expected to reveal crucial details today of a major capital raising exercise. Hopes for an announcement have been raised by Emirates airline's potentially huge order book for engines to power the 21 additional Airbus A380s it has ordered. Among the contenders for what will inevitably be a keenly contested contract is the alliance between General Electric (GE) and Pratt & Whitney.



A source told Gulf News exclusively that although an official announcement today is unlikely, Sheikh Ahmed may release some vital clues to the nature of the size and tenure of a bond. The market has been expecting a dollar-denominated bond. And clues already exist about its size. Given that the airline major is not keen on raising funds from the market, the size of the bond may be limited to no more than US$400 million. Sheikh Ahmed himself has said any bond issue would not necessarily be linked to any funding requirements by Emirates. "Rather it is to satisfy the need of the market."



Emirates' fund position is comfortable and it expects to increase revenue by 25 per cent for the current fiscal year. Emirates launched the first major bond issue in this market in 2001 when it raised Dh1.5 billion, and the issue was subsequently listed on the Dubai Financial Market (DFM). Dubai 2003 also issued domestic bonds worth Dh1.5 billion which were also listed on DFM a few months ago.



Emirates airline has big capital expenditure plans for its fleet expansion, which will take the total number of aircraft to more than 130 by 2012. While Islamic financing will play a major role in this financing process, accounting for some 40 per cent of the necessary investment, a bond remains a distinct possibility. Emirates placed orders for 71 aircraft at the recent Paris Air Show — 30 of which are already financed. (The Gulf News)

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