Etihad Airways to borrow $1.5 billion to pay for new aircraft

UAE national flag carrier, the Abu Dhabi-based Etihad Airways, is borrowing $1.5 billion (Rs60,720 crore) to finance 16 new aircraft. The airline plans to announce the terms of its $500 million financing for four A340-600s next month.

Eithad will hold a roadshow for the $225 million finance package it seeks for two more A340-600s during the first quarter of next year. Later, it will seek another $1 billion to finance a further 12 aircraft.

Airline officials said 52 per cent of Etihad's 37 aircraft have been financed through conventional finance leases, 10 per cent through Islamic finance leases and 14 per cent through operating leases.

The airline, which became the world's fastest growing start-up within less than four years of inception, has 37 aircraft in a fleet covering 45 destinations and carrying 2.8 million passengers a year. In addition, it leases a fleet of six single-aisle aircraft.

Etihad's revenue is likely to nearly double this year to $1.5 billion from last year's $800 million. The airline is expected to break even in 2010.

But Etihad's new management team, under CEO James Hogan, has begun to slow down the pace of the airline's growth to ensure sustainability. "One cannot grow at 100 per cent year-on-year; it simply isn't possible. So, we are managing the growth in line with our long-term objectives," he said.