Saudi Arabian Order Is Largest Islamic Leasing Deal

Saudi Arabian Airlines will take delivery of 50 Airbus aircraft in the largest aviation deal to be secured via Islamic financing.

Airbus announced the deal at the Paris Air Show earlier this month, which includes 30 A320neos and 20 A330-300 Regional aircraft worth around USD$8.2 billion based on list prices.

Dubai-based International Airfinance Corporation (IAFC), an Airbus-backed sharia-compliant aircraft leasing fund, will buy the aircraft and lease them to Saudia, it said in a statement.

The national carrier of Saudi Arabia is the launch customer for the A330-300 Regional, a version designed for domestic and short regional flights which is seen as crucial for overcrowded domestic routes in Asian markets.

The A330 Regional is physically identical to the A330 but has a specially adapted engine maintenance package and a restricted maximum take-off weight that allows Airbus to offer increased discounts in an effort to boost sales volumes.

The deal dwarfs previous aviation transactions that have relied on Islamic financing, while the format is increasingly popular with carriers ranging from Indonesia to Ethiopia.

IAFC, which exclusively finances Airbus aircraft for clients in the Middle East, Asia and Africa, was launched in June last year with seed capital from Airbus and the Jeddah-based Islamic Development Bank.

The aircraft will join Saudi Arabian Airlines' existing Airbus fleet of 12 A330-300s and 50 A320-family planes.