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Citi eyes $4oom plane financing deals in the Gulf
Citigroup is discussing eight to 10 private aircraft financing deals worth more than $400 million in the Gulf as the largest US bank seeks to benefit from the growing ownership of jets among wealthy individuals in the region.
- By Shakir Husain, Staff Reporter
- Published: 00:01 August 9, 2008
Dubai: Citigroup is discussing eight to 10 private aircraft financing deals worth more than $400 million in the Gulf as the largest US bank seeks to benefit from the growing ownership of jets among wealthy individuals in the region.
Mary Schwartz, global head of aircraft finance for Citi Global Wealth Management, said private jet purchases in the Gulf Cooperation Council (GCC) doubled in the last two years from 43 deals in 2006 to 86 in 2008.
Growing airport security hassles, overcrowding and flight delays are encouraging wealthy individuals and companies in the region to have their own planes, she told Gulf News in a phone interview.
There are an estimated 500 to 600 privately-owned aircraft in the Middle East, and their number is expected to grow significantly in the coming years.
"There is much more wealth than before, and business people are travelling more for both business and pleasure. They find it much more convenient to travel on a private jet than use a commercial airline. Also, a few years ago people did not want to flaunt their wealth so they did not buy private aircraft because it seemed a little bit extravagant. Now it is a lot more accepted," Schwartz said.
Private aircraft purchases in the Gulf involve both typical small-cabin executive jets and large-cabin planes.
Since its first deal worth more than $40 million in 2001 in the Gulf, Citi has financed private planes worth about $200 million in the region.
Schwartz said the bank recently closed a $16-million deal for financing a business jet in the UAE.
To cater to potential clients in the Gulf, where Islamic financing has grown in popularity in recent years, the bank has developed Sharia-compliant funding structures for plane purchases.
"Globally the private jet industry is up about 25 per cent since a year ago. The market is growing dramatically," Schwartz said.
According to Brazilian planemaker Embraer, deliveries of business jets in Europe, Africa and the Middle East have grown at an average annual rate of 30 per cent in the last four years.
The Middle East is seen as one of the fast growing "non-traditional" business jet markets, with demand coming from both corporate buyers and charter service operators.
Embraer has projected that 13,000 executive planes worth $200 billion will be sold worldwide over the next decade.
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