It has been revealed today that Emirates has signed a landmark dual-tranche financing facility with Emirates NBD, the biggest lender in Dubai. The deal, inked on September 30th, will release $750 million in finance for the airline, over a five-year deal.
Landmark transaction inked
Dubai’s biggest bank, Emirates NBD, has signed what is said to be a landmark transaction with its home airline, Emirates. The deal will see $750 million released to the airline in additional liquidity, as part of a five year dual tranche financing facility.
Emirates NBD commented on the agreement saying,
"The landmark transaction remains competitively priced and marks a first for Emirates Airline as a sales-receivable backed financing structure, aimed to diversify their liquidity pool."
It is the first time Emirates has taken a loan linked to its sales receivables. The airline has received $3.1 billion in state support from Dubai since the beginning of the pandemic. The last $1.1 billion was delivered in June, around the same time that the airline reported a huge $5.5 billion loss for the full financial year 2020/21. That was the first loss reported by the airline since its very earliest years of operation.
With access to an additional whack of liquidity, Emirates is clearly hoping this will see it through to a meaningful restart of travel. It’s a big achievement for the banking partner as well. Ahmed Al Qassim, Emirates NBD's head of corporate and institutional banking, added in a statement,
“This first-of-its-kind transaction demonstrates Emirates NBD Group’s commitment towards supporting Emirates, the largest airline in the region. As a leading regional bank, we are continuously exploring new and innovative financing solutions to support our valued clients and their long-term objectives. As Dubai gears up to be the most visited city by 2025, we look forward to playing our part in achieving this goal through more of such landmark transactions with Emirates Airline”
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A tough time for Middle East airlines
For the airlines that have built their foundations on connecting the world from east to west, the pandemic has hit them harder than most. With limited domestic connectivity options available, and none for all-widebody operator Emirates, the potential to carry passengers simply vanished overnight.
Having grounded its entire fleet for several weeks, Emirates has been rebuilding its business slowly but surely, relying on carrying cargo below the wing to make the thinly loaded passenger flights viable. As time went on, things have improved further, with the UAE among one of the first countries to throw open its borders to tourists and transit passengers.
From its big loss in 2020/21, Emirates is hoping to claw its way back to profitability soon. The airline is currently flying to more than 120 cities, having reinstated more than 90% of its pre-pandemic network. By the end of the year, Emirates intends to restore some 70% of its capacity.
It still has a mountain to climb to get back to its powerful pre-pandemic position, but Emirates is keenly looking ahead to the future. With the Expo kicking off and visitors returning to the Emirate, the airline hopes that 2022 will be a big turning point in its future.