Air Arabia raises Islamic loan to fund new aircraft

19 November 2014

$230m deal arranged by Dubai Islamic Bank

Sharjah-based low-cost airline Air Arabia has signed a $230m sharia-compliant financing facility arranged by Dubai Islamic Bank (DIB) to fund the delivery of new aircraft.

The ijara facility, which is an Islamic lease contract where the bank leases property to a client for a set period of time before handing over ownership of the property, will finance the delivery of new aircraft every two months starting from January 2015.

The final planes will be handed over by the end of next year.

Air Arabia has now received 29 of 44 A320 aircraft ordered from Toulouse-based aircraft manufacturer Airbus in 2007.

The airline was one of the first low-cost carriers in the Middle East. It posted profits of AED498m ($135.6m) for the first nine months of the year, marking an increase of 46 per cent compared with the same period last year.

Growing passenger numbers are driving revenue for Air Arabia. The airline carried 5.1 million passengers in the first nine months of the year, representing a 13 per cent increase year-on-year.

At the start of the year, Air Arabia also became Ras al-Khaimah’s official carrier.

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