Gulf banks to play bigger role in financing airlines

[DUBAI] Persian Gulf banks are set to increase funding to the region's airlines who have placed a record number of plane orders as part of their expansion plans, according to lenders including Novus Aviation Capital.

Airlines will be a strong driver of borrowing this year as they tap financial markets to cover their large capital expenditure requirements, the banks said. The most popular debt instruments may include finance leases, bonds, Syariah-compliant sukuk, Enhanced Equipment Trust Certificates (EETCs) and debt.

"There is a strong expectation that the region's banks will play an increasing role in financing the region's airlines," Mounir Kuzbari, executive vice-president and board member of Novus Aviation, said on Sunday. "There is still a significant surplus of Middle Eastern airline demand for financing over Middle Eastern banks supply, indicating an opportunity for the region's banks to play a greater role."