Emirates Airline plans to lease new A380 from finance company

Dubai's Emirates airline plans to lease new Airbus A380 superjumbo aircraft from a finance company that will issue $630 million of bond-type certificates to fund the purchase of the planes, reports Reuters.

The airline has been diversifying its funding strategy to expand its fleet and compete with regional peers such as Etihad Airways and Qatar Airways.

Analyst Saj Ahmad commented on the news: “Emirates has not been shy in doing creative finance deals for its Airbus A380 fleet. Given its limited market appeal and poor residuals on the second hand market and general weak pricing given the dearth of orders for the A380, Emirates has engaged in sale and leaseback deals with Doric Asset Finance already.

“While Doric will still suffer from a depreciating asset in the A380, Emirates avoids the acquisition risk but still gets new airplanes to augment its expansion, and gets to hand them back when no longer required.”

Ahmad added: “ Doric signing up an MoU for 20 more A380s at the Paris Air Show last week, it seems logical that existing customers like Emirates and Singapore Airlines would be prime targets - it's very clear the A380 is a not an appealing airplane on the broader market like the 777, 787 or A350, therefore Doric is bearing much of the risk in these transactions - offset in part by the generous and continued discounting by Airbus on the A380 to make it saleable.”