Exactly a month after taking off, budget carrier flydubai has signed a $320 million (Dh1.1 billion) deal with GE Commercial Aviation Services (Gecas) for financing four of the carrier's Boeing 737-800 aircraft.
The sale and leaseback agreement between the two parties covers the aircraft due to be delivered to flydubai from Boeing in 2009, with two expected this month, followed by one each in October and December.
The first two aircraft to arrive in July will service flydubai's recently announced Indian routes of Lucknow, Coimbatore and Chandigarh.
With a total of six aircraft expected to be in its network by the end of 2009, flydubai's first two aircraft were self-financed, and the airline expects at least six more planes to join its fleet network in 2010, according to flydubai's Chief Executive Ghaith Al Ghaith.
Asked about the airline's financing needs for 2010, Ghaith told Emirates Business: "It is too early to say what our financing needs would be for 2010. In these things, one always looks at the best deal possible. We will not require any further financing for the next six to nine months at least."
He added that the airline will look to explore different avenues of financing for 2010. "This is a significant deal for flydubai as it is the first financing that we have secured from outside the UAE. And this deal ensures our financing needs for the rest of 2009 when we will receive a further four aircraft from Boeing," he said.
Meanwhile, with financing conditions becoming tougher for the aviation industry, airlines are struggling to secure funding for the new aircraft.
Asked how the Middle Eastern airlines are managing their aircraft finance needs, Doug Winter, GE Commercial Aviation Services' Senior Vice-President and Region Manager, Middle East, Africa and CIS, said: "The scale of aircraft financing that is not yet organised, to my understanding, is not that significant.
"Much of the delivery stream that is coming for airlines such as flydubai, is already financed through this period to next 12-18 months horizon." He added that airlines are adjusting their delivery schedules in some cases. "But I do not see a decline in aircraft financing," said Winter.
Gecas, the US and Irish commercial aircraft financing and leasing business of GE, has a fleet of more than 1,500 owned aircraft with about 250 airlines in more than 70 countries, and it manages more than 325 aircraft for others. flydubai, which expects to touch a 50 aircraft mark by 2016, will launch services to more than 14 destinations this year, according to Ghaith.
"This deal with Gecas will help us to launch more than 14 routes by the end of 2009," he said.
The Dubai-based airline, however, which kicked off operations with start-up capital of Dh250 million, does not have a breakeven target yet. Asked when flydubai would be profitable, Ghaith said: "We are just starting out so it is very difficult to give a target."
Currently operating to four destinations – Beirut (Lebanon), Amman (Jordan), Damascus (Syria) and Alexandria (Egypt) – flydubai will fly to eight destinations (including Aleppo in Syria) across the Middle East, North Africa and India.
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