Emirates and Ryanair are calling for the structuring of more locally-based enhanced equipment trust certificate (EETC) financings in order to take advantage of robust demand in the capital markets.
“What we want is an Islamic EETC - we want to see if it can work,” said Nirmal Govindadas, vice-president of financing at Emirates Airline today at the Airline Economics forum in Dublin.
“We think there is a market there because Islamic structures have an excellent linkage with aircraft, so it is something we want to look at,” he says.
Ryanair is also keen to take advantage of the EETC market, but says a problem with the US capital markets, where these financings typically occur, is that they are dependent on the US dollar.
“Our business is based in euros…so we would like to see the development of a euro-based EETC, or a local currency-based EETC, to eliminate the currency risk,” said Ryanair’s treasurer, Jim Dempsey.
Dempsey says Ryanair is “toying” with funding part of its order book through the EETC market.
“We are in the process of getting the company rated, so that outcome will determine the market access that we have,” he adds.
Dempsey acknowledges the favourable interest rate environment is encouraging Ryanair to pursue opportunities in the capital markets during the next couple of years.