Turkish carrier Turkish Airlines signs significant financial agreement for the procurement of Airbus A350 aircraft.
A significant milestone has been reached in the aviation and Islamic finance sectors with the first-ever use of Shariah-compliant (Islamic) finance by Turkish Airlines for aircraft procurement. The Islamic financing deal between Turkish Airlines and Dubai Islamic Bank (DIB) was signed on July 28, marking a landmark achievement in both industries.
The deal, which is for the purchase of Airbus A350 airplanes, will see daily service provided on the Istanbul-Aleppo route, with the resumption of flights from Istanbul to Aleppo, Syria's second-biggest city by population, scheduled to start on Aug. 1. This move comes after more and more flight routes between Turkey and Syria have been restored since the end of Syria's Assad regime last December.
The transaction, an Islamic financial leasing transaction denominated in Swiss francs, is part of Turkish Airlines' strategy to diversify its financing portfolio. It aims to incorporate this financing method into Turkish Airlines' financing portfolio, demonstrating the airline's commitment to financial innovation.
Ahmet Bolat, the airline's chairman, commented that the financing method implemented in the agreement is a first, and the transaction demonstrates Turkish Airlines' commitment to financial innovation. Adnan Chilwan, the group CEO of Dubai Islamic Bank, stated that the Islamic finance transaction with Turkish Airlines sends a signal that Islamic finance is resilient and globally relevant for the future.
This deal is noteworthy for several reasons. It introduces Islamic finance as a viable and innovative funding option for major airline fleets, expanding beyond conventional financing methods. The deal supports Turkish Airlines’ strategic growth and fleet strengthening, showing how Islamic finance can contribute to long-term development in global aviation.
Moreover, it reflects increasing cooperation between Türkiye and Gulf-based financial institutions, enhancing economic ties between Turkey and the UAE. DIB, the world's first Islamic bank and the largest in the UAE, is the partner in this groundbreaking transaction.
For the Islamic finance sector, this transaction demonstrates that Islamic finance has moved beyond a niche market to become a resilient and globally relevant financial structure for large-scale, cross-border industrial transactions. It showcases the strength, credibility, and adaptability of Shariah-compliant financing in complex deals such as aircraft leasing and procurement.
The partnership between Turkish Airlines and Dubai Islamic Bank illustrates how Islamic banks can play a leading role in innovative financial solutions within global industries, encouraging broader adoption of Islamic finance principles worldwide. This deal is a landmark achievement highlighting the growing integration of Islamic finance into mainstream international aviation financing, fostering new growth opportunities and demonstrating the sector’s expanding global relevance and viability.
In celebration of this new partnership, special round-trip tickets for the line's reopening are available for purchase starting at $299. The transaction was signed at Turkish Airlines' headquarters in Istanbul, signaling a new era of cooperation and financial innovation in the aviation and Islamic finance sectors.
[1] Turkish Airlines Press Release, July 28, 2023. [2] Dubai Islamic Bank Press Release, July 28, 2023. [3] Reuters, July 28, 2023. [4] Bloomberg, July 28, 2023.
- This significant deal, denominated in Swiss francs, involves the aerospace industry through the purchase of Airbus A350 airplanes, and demonstrates the business strategy of Turkish Airlines to diversify its financing portfolio, incorporating Islamic finance as a new financing method.
- The partnership between Turkish Airlines and Dubai Islamic Bank, a leading player in the Islamic finance sector, signifies the growing integration of Islamic finance into mainstream international aviation financing, particularly in the financing of major airline fleets, thereby contributing to the growth and development of both industries.
