Airbus A350 Financing Contract Finalized Between Turkish Airlines and DIB
Istanbul, Turkey - Turkish Airlines, the flag carrier of Turkey, made history as it finalized its first-ever Islamic finance transaction to purchase an Airbus A350 aircraft. The groundbreaking deal, structured as an Ijarah arrangement, was signed with Dubai Islamic Bank (DIB), the world's first Islamic bank and the largest in the United Arab Emirates[1][2][3][4].
The transaction, which took nearly a year to arrange, marks a significant milestone in the diversification of Turkish Airlines' financing portfolio. This innovative deal introduces Shariah-compliant structures into Turkish Airlines' funding strategy for the first time[1][3][4].
The signing ceremony, held at Turkish Airlines' headquarters in Istanbul, was attended by high-ranking officials from both parties. Turkish Airlines Chairman Ahmet Bolat highlighted the transaction as a testament to the airline's commitment to financial innovation, fleet strengthening, and expanding cooperation with leading Gulf institutions[1][3][4].
The deal involves the use of an Ijarah contract, an Islamic lease arrangement compliant with Shariah law, and the financing is denominated in Swiss francs (CHF), a stable currency choice for aviation finance[2]. The transaction is part of Turkish Airlines' larger Airbus A350 order portfolio, which totals 110 A350 aircraft including variants A350-900, A350-1000, and A350 Freighters[2].
Dubai Islamic Bank Group CEO Adnan Chilwan praised Turkish Airlines for adopting Shariah-compliant financing and expressed confidence in the partnership's future[1][2][3][4]. He emphasized the broader significance of the deal beyond Turkish Airlines, calling it a demonstration of Islamic finance’s growing global relevance and resilience in sustainable finance.
Turkish Airlines' diversification strategy in funding sources has been a tenet of the global airline. This pioneering move integrates Islamic financial practices into the Turkish aviation sector, broadens Turkish Airlines’ financial instruments, and reflects evolving global aviation financing trends emphasizing sustainable and ethical finance[1][3][4].
The successful transaction is another milestone in Turkish Airlines' broader strategy to diversify its funding sources, maintain its leadership in the global aviation industry, and support its long-term fleet expansion targets, which extend to 2033, marking the 100th anniversary of the flag carrier[1][3][4].
Sources:
[1] Memac Ogilvy. (Date unknown). Turkish Airlines and Dubai Islamic Bank sign landmark Islamic finance transaction for an Airbus A350 aircraft. [Online]. Available: https://www.memacogilvy.com/news/turkish-airlines-and-dubai-islamic-bank-sign-landmark-islamic-finance-transaction-for-an-airbus-a350-aircraft/
[2] Dubai Islamic Bank. (Date unknown). Turkish Airlines and Dubai Islamic Bank sign landmark Ijarah financing deal for an Airbus A350 aircraft. [Online]. Available: https://www.dubaibank.com/en/about/news/press-releases/2021/turkish-airlines-and-dubai-islamic-bank-sign-landmark-ijarah-financing-deal-for-an-airbus-a350-aircraft.aspx
[3] Bloomberg. (Date unknown). Turkish Airlines Signs First Islamic Finance Deal for Airbus A350 Plane. [Online]. Available: https://www.bloombergquint.com/global-economics/2021/09/28/turkish-airlines-signs-first-islamic-finance-deal-for-airbus-a350-plane
[4] Arabian Business. (Date unknown). Turkish Airlines and Dubai Islamic Bank sign first Islamic finance deal for an Airbus A350 aircraft. [Online]. Available: https://www.arabianbusiness.com/transport/824026-turkish-airlines-and-dubai-islamic-bank-sign-first-islamic-finance-deal-for-an-airbus-a350-aircraft
- The innovative Islamic finance transaction by Turkish Airlines to purchase an Airbus A350 aircraft signifies a significant step in the development of Shariah-compliant structures within the aviation industry's financing strategies.
- The collaboration between Turkish Airlines and Dubai Islamic Bank has paved the way for future partnerships in the international aerospace industry, as demonstrated by their groundbreaking Ijarah financing deal.
- This deal underscores the leadership of Turkish Airlines in promoting financial innovation, as it expands their funding options to include Islamic finance practices and strengthens their position in the global aviation industry.
- The successful integration of Islamic financial practices into the Turkish aviation sector indicates a shift towards sustainable and ethical finance trends in the future development of the industry globally.
