Dubai Flydubai said Wednesday it signed aircraft finance deals worth more than $750 million (Dh2.7 billion) — through General Electric Capital Aviation Services and Babcock and Brown Aircraft Management — which analysts say could lead to Dubai's budget airline flying far ahead of the region's competitors.
The UK's FBE Aerospace chief analyst Saj Ahmad told Gulf News: "Rivals will be worried that during the downturn they are not expanding and flydubai is. Flydubai will use the 737-800s on routes which rivals like Air Arabia [using the A320s] cannot match."
Sharjah's Air Arabia and Kuwait's Jazeera Airways share some of the most popular routes with flydubai. However, flydubai flies to destinations that the others don't, such as Erbil in the Kurdistan region of northern Iraq, Djibouti and Azerbaijan's Baku.
Ahmad said he expected flydubai to expand its routes into northern and southern Africa as well as across India and Saudi Arabia.
The airline said it would use the cash to finance its next nine aircraft purchases, plus other financing requirements the carrier may have up to June next year.
Financiers' endorsement
Flydubai chief executive officer Gaith Al Gaith commented on the lenders' willingness to assist the airline.
"[General Electric Capital Aviation Services and Babcock and Brown Aircraft Management] are some of the largest aircraft financiers in the world and their faith in flydubai is a huge endorsement of us and our success since our launch," he said.
He explained that the carrier had been overwhelmed by the positive response.
"This is a very nice position for a young and ambitious airline to be in. I believe this is a reflection not only of our position but also of the confidence the financial community around the world has in Dubai," he said.
Max Sukkhasantikul, commercial aviation consulting analyst at Frost and Sullivan, told Gulf News that financiers found it easy to trust flydubai, not only because of its business model and potential, but also because it was supported by the Emirates Group.
"The Middle East is a growth market, which is why there is growth in not only the full-service carriers in the region, but [in] airlines like flydubai and Air Arabia as well," he said.
The deals are based on an eight-year term sale and leaseback agreements.
General Electric Capital Aviation Services has committed to buying six new aircraft in addition to four existing ones. Babcock and Brown Aircraft Management added another three aircraft, to increase its commitment to six in total.
Ahmad attributed the financiers' confidence to flydubai being the fastest growing low-cost airline in the region with an ambition to become the biggest.
"With Emirates expanding and so much traffic coming into Dubai, investing in flydubai makes perfect strategic sense," he said.
Babcock and Brown Aircraft Management's president Steve Zissis said the Boeing Sky 737-800NG jets it would finance would have a new type of in-flight entertainment system from Lumexis.
