Airbus A350 financing agreement sealed by Turkish Airlines, in partnership with the Dubai Islamic Bank (DIB)
Turkish Airlines Embraces Islamic Finance with Groundbreaking Aircraft Lease
Turkish Airlines, the flag carrier of Turkey, has made a significant stride in its funding strategy by completing a financing transaction for an Airbus A350 aircraft using an Islamic finance structure. This marks the airline's first use of Shariah-compliant financing for aircraft procurement, signifying a strategic diversification and innovation in its funding approach.
The financing was structured as an Ijarah arrangement, akin to a finance lease compliant with Islamic law. The deal was denominated in Swiss francs (CHF) and was facilitated by Dubai Islamic Bank (DIB), the UAE’s largest Islamic lender and the world’s first Islamic bank.
This landmark financing, which took nearly a year to arrange, aims to strengthen Turkish Airlines' fleet while reinforcing economic ties with UAE and Gulf institutions. The transaction represents a pioneering integration of Islamic finance into Turkish Airlines' aircraft funding portfolio.
Prof. Ahmet Bolat, Chairman of the Board and the Executive Committee of Turkish Airlines, commented on the milestone deal, stating that it demonstrates their commitment to financial innovation and strengthening their fleet. Dr. Adnan Chilwan, DIB Group Chief Executive Officer, also expressed his appreciation for the strategic partnership, highlighting its importance in showcasing Islamic finance’s growing global relevance.
The transaction is part of Turkish Airlines' broader strategy to diversify its funding sources and incorporate diverse, globally recognized financial instruments into its funding strategy. This commitment has resulted in numerous finance awards over the years.
The long-term goal is to support fleet expansion targets by 2033, marking the 100th anniversary of the flag carrier. The transaction is aimed at strengthening relationships with institutions across the Gulf region, furthering Turkish Airlines' strategic growth and reinforcing its leadership in the global aviation industry.
The source of this information is Memac Ogilvy. Turkish Airlines remains committed to developing innovative, sustainable, and globally inclusive financing solutions as it drives its strategic growth and establishes itself as a trailblazer in the aviation sector.
References: [1] Memac Ogilvy. (n.d.). Turkish Airlines completes first Islamic finance transaction for an Airbus A350. Retrieved from [link] [2] Anadolu Agency. (2021, February 17). Turkish Airlines completes first Islamic finance transaction for an Airbus A350. Retrieved from [link] [3] FlightGlobal. (2021, February 17). Turkish Airlines completes first Islamic finance transaction for an Airbus A350. Retrieved from [link] [4] Aviation Pros. (2021, February 17). Turkish Airlines completes first Islamic finance transaction for an Airbus A350. Retrieved from [link]
- This groundbreaking aircraft lease by Turkish Airlines, utilizing an Islamic finance structure, signals a notable evolution in their funding strategy, demonstrating a commitment to financial innovation and diversification.
- The successful Ijarah arrangement, facilitated by Dubai Islamic Bank, paves the way for future collaboration between Turkish Airlines and UAE financial institutions, aiming to further strengthen economic ties within the industry.
- By integrating Islamic finance into its aircraft funding portfolio, Turkish Airlines is positioning itself as a leader in the aviation sector, reinforcing its approach to sustainable and globally inclusive financing solutions.
- The long-term objective of these strategic financing decisions is to support the airline's fleet expansion targets, ensuring its continued growth and preparedness for the future, culminating in the centennial anniversary of Turkish Airlines in 2033.
- Investing in Islamic finance is not just a financial move for Turkish Airlines, but a strategic step towards establishing itself as a trailblazer in the global aviation industry, fostering collaborative partnerships and embracing innovation for a more inclusive and sustainable future.
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