Boeing Capital is exploring opportunities for Islamic finance in the aviation sector and the possibility of including aircraft finance in the Islamic sukuk market, in which an aircraft finance portfolio would be secured by an instrument known as the Enhanced Equipment Trust Certificate.
Boeing Capital in the Middle East
As a wholly owned Boeing subsidiary, Boeing Capital Corporation creates financing solutions for customers purchasing the company’s commercial airplane and defence products. As the company’s investment bank, it works closely with third-party financing sources that provide nearly all of the financing support required by Boeing customers. It also manages the company’s $3.5 billion portfolio of commercial jetliners.
Boeing Capital is continually strengthening its presence in the Middle East region, which is recognized as a high
-growth area for commercial aviation with increasing demand for aviation financing. It regularly organizes events in the Middle East that are designed to engage the region’s finance community. Since 2006, Boeing
Capital has hosted annual airline planning seminars for financiers in the Middle East, and its Middle East
aircraft financier and investor conference has become an annual event.
Sukuk Used for Aircraft Finance
Sukuk have been used on a number of occasions to finance airlines and aircraft purchases.
- Emirates Airlines has issued sukuk most recently in 2015 compromising of a 10 year sukuk for the value of $913 million. The sukuk was used to fund the orders for aircrafts from Boeing and Airbus. Guaranteed by Her Britannic Majesty’s Secretary of State acting by the Export Credits Guarantee Department of the UK Government, the sukuk was priced on 25 March at 2.471%. The issuance saw strong demand from global investors, attracting orders exceeding US$3.2 billion and recording an oversubscription of 3.6 times.
- Emirates also issued in 2013 a $1 billion sukuk 10 year sukuk which was priced at 3.875%.
- Ethihad Airlines issued a sukuk in November 2016 for $1.5 billion which was priced at 3.86%.
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