Boeing Capital is considering offering Islamic financing options for its aircraft, in conjunction with a partner bank or financial institution to create a Shariah-compliant offering. While this project is in its early stages, “it will be Islamic content and it will support airline financing” said Vasgen Edwards, managing director for Middle East-Africa customer financing.
Analysis
Airbus established the Alif Fund in 2014, a shariah-compliant aircraft leasing fund headquartered in Dubai. Boeing
is late to the game, and behind its chief competitor in providing the Shariah-based financing. Emirates, Etihad and Fly Dubai have all issues Islamic bonds, and there is a significant need for aircraft in the Islamic countries.
Insight
A disproportional number of orders for Boeing’s new 777X are from middle eastern carriers. As the aircraft, which is now under construction and scheduled for introduction in 2020 nears entry into service, financing options will be needed for those key customers. Albeit late to the party, Islamic finance will be important to key elements of Boeing’s strategy, and a tool they need in the MENA region.
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