Dubai: Emirates airline could look at refinancing a $550 million (Dh2.02 billion) bond maturing in June as borrowing costs fall, according to a company executive.
Gary Chapman, president of Emirates' dnata unit and services, was quoted yesterday by Bloomberg as saying the airline will study the economics of both bonds and sukuk as refinancing options.
He said a decision would be made after the company announces its annual results in early to mid-May for the financial year that ended on March 31.
Aviation analyst Andrew Charlton of Aviation Advocacy told Gulf News he thought it was a positive step.
"Taking advantage of changes in the market to trim and refine their borrowings is a very good strategy," he said.
"Reducing borrowing costs will directly improve the bottom line."
‘Pretty attractive'
Calling the market "awash with funds", Chapman, who is also responsible for the company's finance, reportedly said that the market is "looking pretty attractive for good credit" and that there are funds available at "relatively attractive pricing".
"This comes as no surprise that Emirates is evaluating its options," said Saj Ahmad of StrategicAero Research.
"As one the most cash-rich airlines in the world, reducing its bond costs will give them significant financial leverage as well as make the carrier even more attractive for investors that are looking for financial safe havens where they know their borrowing is not at risk."
Ahamd added that the money could be ploughed directly into payments for its existing order backlog of Airbus A380s and Boeing 777-300ERs, and also for buying new planes.
‘Strong cash position'
Having raised $1 billion from the sale of a five-year bond in June, the price on Emirates' $550 million floating-rate Islamic bonds maturing in June rose to 99.37 cents on the dollar on Friday, the highest since November 2007, according to the Bloomberg report. It added that Emirates retains a "strong cash position".
"The performance of the bond we did has been very good," it quoted Chapman as saying.
