PUBLISHED BY: Khaleej Times
UAE airlines may require around $250 billion financing in the next 20 years, Novus Aviation Capital president and chief executive officer Safwan Kuzbari told Khlaeej Times in an interview.
The Dubai-based Novus, one of the fastest growing aircraft leasing businesses, offers airlines and aircraft owners comprehensive capital raising and leasing solutions and provides bespoke products to investors. The family-owned business team has been involved in more than 400 aircraft transactions and closed deals with a combined value in excess of $8 billion.
The total size of world aircraft financing is estimated at $112 billion in 2014 for all aircraft manufacturers. According to the latest 20-year manufacturer forecasts, the Middle East market will account for more than 2,000 new aircraft deliveries and require more than $500 billion in financing up to 2033. “With its four rapidly growing airlines [Emirates, Etihad Airways, flydubai, Air Arabia] and expanding airport infrastructure, the UAE could possibly take up to 50 per cent of this [Middle East] allocation,” Kuzbari explained.
This year Novus Aviation has been involved in deals with Emirates, British Airways, Malaysia Airlines and Finland’s Finnair. Deals include three A380s, two A340, two A330 and one B777. The company expects three more lease back deals by the end of this year, according to Kuzbari. He expects that the company’s portfolio will exceed $2 billion mark by the end 2014.
“We currently have six aircraft transactions in place with Emirates. Three of which are Sale and Lease Back for B777s and the other three are A380 financing transactions. Discussions are ongoing with Emirates for additional deals in the near future,” he informed. Talking about the aviation sector in the UAE, he said: “It looks very promising, with Emirates and Etihad dominating the full service industry, while Air Arabia and flydubai enjoy excellent performance as low cost carriers. Moreover, the airlines are in continuous growth and development.” In general, the airline business has changed in terms of airline consolidation and more controlled capacity globally, he said, adding: “Moreover, airlines are shifting to better performing and more efficient aircraft. As for the leasing market, there is severe competition, high liquidity and several new entrants.” “Declining fuel prices will have a very positive impact on airlines’ profitability. It is worthy to note that some airlines were harmed by signing hedging contracts for fuel prices,” he said.
He informed that NordLB has recently joined Novus alternative financing platform Tamweel Aviation Finance (TAF), a joint venture with Airbus and the Development Bank of Japan. “Moreover, we recently established an alliance with KDB Daewoo Securities in Korea and we are in discussions with leading financial institutions in Asia and the US,” he added.