Saudi Arabian Airlines will take delivery of 50 aircraft from Airbus in the largest aviation deal to be secured via Islamic financing, as the European planemaker tries to gain an edge over rival Boeing in the key Gulf aviation market.
Airbus announced the deal at the Paris Airshow earlier this month, which includes 30 A320neo planes and 20 A330-300 Regional aircraft worth around $8.2 billion based on list prices.
Dubai-based International Airfinance Corporation (IAFC), an Airbus-backed sharia-compliant aircraft leasing fund, will buy the aircraft and lease them to Saudi Arabian Airlines, it said in a statement.
The national carrier of Saudi Arabia is the launch customer for the A330-300 Regional, a version optimized for domestic and short regional flights which is seen as crucial for overcrowded domestic routes in Asian markets.
The A330 Regional is physically identical to the main model but has a specially adapted engine maintenance package and a restricted maximum take-off weight that allows Airbus to offer increased discounts in an effort to boost sales volumes.
The deal dwarfs previous aviation transactions that have relied on Islamic financing, while the format is increasingly popular with carriers ranging from Indonesia to Ethiopia.
IAFC, which exclusively finances Airbus aircraft for clients in the Middle East, Asia and Africa, was launched in June last year with seed capital from Airbus and the Jeddah-based Islamic Development Bank.
The fund appointed Dubai-based Palma Capital and Quantum Investment Bank as arrangers to complete the deal, which consists of both equity and debt financing.
The aircraft will join Saudi Arabian Airlines’ existing Airbus fleet of 12 A330-300s and 50 A320-family planes.