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JEWELS OF THE EAST
01 April 2007
Airlines and lessors are diversifying their sources of funding through Shariah compliant deals. Janet Du Chenne reports
When it comes to financing, a basket of structures is used to suit airline and asset. While the demand for traditional types of financing is shown on the Airfinance Journal deals news pages, Islamic finance transactions appear to sing a softer tune. That is not to say there are less of these nuggets around. These structures enable airlines to diversify their sources of funding and remain a good way of tapping the liquidity in the Middle East.
Recent examples include Emirates, which mandated Natixis to finance an A380 and Alafco's sale/leaseback deal with THY for several 737s.
As a unit of the Kuwait Finance House, all of Alafco's deals are Sharia-compliant. The Millennium Aircraft Leasing Company (MALC), an Islamic fund, also leases about 20 aircraft. Novus Aircraft Management manages these Sharia-compliant leases. Citigroup also closed a $150 million Sharia-compliant predelivery payment facility for Pakistan International Airlines' order of 777 aircraft.
The main proviso...
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