Etihad Airways and Natixis close the first Aircraft Leasing Transactions in Abu Dhabi Global Market (ADGM)

ADGM 17/01/2017

Etihad Airways and Natixis have completed a Sale and Leaseback for two 2016 vintage Airbus A380 aircraft. Both aircraft are owned by special purpose companies based in Abu Dhabi Global Market (ADGM), the world’s newest international financial centre (IFC), and are leased to Etihad for a period of 12 years. 

This marks the first aviation finance transaction in ADGM since the recent enactment of the Cape Town Convention and Aircraft Protocol 2001 into its insolvency framework to support its ambition to be an aviation financing and asset management hub in the UAE and the MENA region. The new set of regulations further augments ADGM’s strengths as an international jurisdiction for aviation financing and leasing as well as global financial services.

The milestone achievement also marks Etihad’s first operating lease of an Airbus A380. The location of the two special purpose companies that own the aircraft in ADGM reaffirms that it provides a Special Purpose Vehicles regime on par with the best international jurisdictions in terms of features, cost and ease of set-up.

The 12-year operating leases are leveraged with a combination of Islamic and conventional tranches of debt arranged by Natixis, which acted as Sole Lead Arranger, whilst Dubai Islamic Bank (DIB), First Gulf Bank (FGB) and Union National Bank (UNB) acted as co-arrangers.

As a result of this transaction, Natixis and ADGM are in advanced discussions for setting up an aircraft investment platform in ADGM which will target investors looking for high USD yield. This development reinforces ADGM’s commitment to provide a dynamic and conducive environment for successful aviation transactions, and to attract more global aviation financing and leasing businesses to establish their operational presence in ADGM to conduct their regional business.

HE Ahmed Al Sayegh, Chairman of ADGM, said: “We are pleased to welcome both global industry leader Natixis and our national carrier Etihad Airways to the ADGM family. The civil aviation scene in the UAE and Abu Dhabi has generated significant opportunities and is expected to grow exponentially in the next decade. In addition, the Middle East is a vibrant aviation hub with airports increasing their handling capacity and airlines expanding their fleet to address global demand. These, in turn, fuel further demand for aviation financing.”

“The aviation industry can continue to rely on ADGM’s established platform to expand its global presence, at the same time, gain access to unique and tailored financing and services to achieve objectives. We look forward to working closely with Natixis to support their business strategy in Abu Dhabi and globally.”

James Hogan, Etihad Aviation Group President and Chief Executive Officer, said: “We are delighted to have worked with Natixis on this landmark transaction in the ADGM. This transaction validates the continued dedication of ADGM’s Board of Directors to support the growth of Etihad Airways and the civil aviation sector by establishing a framework that caters to the aviation industry’s financing needs.”

Ramki Sundaram, Global Head of Aviation at Natixis, added: “We’re very pleased to lead this sale and lease back of the A380 aircraft for Etihad. What’s more, we’re delighted to be involved in the first aviation transaction from ADGM and to play a part in supporting ADGM’s ambitions to grow in the aviation sector. It has been a pleasure to work on this transaction with a syndicate of Middle Eastern banks which further underpins the region’s commitment to aviation finance. The success of this transaction also highlights Natixis’ expertise in arranging and efficiently executing a broad range of aviation transactions, and our dedication to providing value-added capital solutions to clients.”

Etihad Airways, the national carrier of the United Arab Emirates, is fully owned by the government of Abu Dhabi. Operating from Abu Dhabi International Airport, Etihad Airways benefits from its strategic geographical location connecting east with west, carrying 17.6 million passengers in 2015 (up 18.9 per cent from 2014). Etihad is the second largest airline in the UAE and the third biggest in the Middle East. It operates one of the youngest fleet of aircraft in the world with an average age of six years.