Unlisted flydubai Says H1 Net Profit Up 40% Ahead Of Debut Sukuk

Budget carrier Dubai Aviation Corp, known as flydubai, posted a 40 per cent increase in net profit in the six months to June 30, it said in an investor presentation to market its potential debut sukuk.

The unlisted airline, which started operations in June 2009, made a net profit of $14 million in the first half of this year, said the document seen by Reuters. Revenue in the period was $515 million, up 17.1 per cent on the same six months of 2013.

The carrier, fully owned by the Dubai government, started meeting investors in Singapore on Thursday and plans to head to the Middle East and Europe through Tuesday ahead of selling a potential dollar-denominated Islamic bond.

Should flydubai complete an issue, it would be only the second Gulf carrier to raise funds through the debt capital markets after Dubai’s Emirates. Emirates’ previous sukuk offering, worth $1 billion, was sold in March last year.

In the past, flydubai has relied on term loans and leasing arrangements for funding so the sukuk will help to diversify its sources of financing, it said in the presentation.

As of June 30, outstanding debt at the company was $1.05 billion and it had authorised and contracted capital commitments in respect to its fleet of $11.4 billion.

Its costs in the six months to June 30 were $528 million, up from $449 million in the same period a year ago.

The firm has a network covering 71 destinations across 42 countries in Europe, Asia and the Middle East as of June.

Flydubai will issue the unrated Wakala-structured sukuk of benchmark size though the Al Shindagha Sukuk Limited special purpose vehicle, with the Islamic bond listed on Nasdaq Dubai and the Irish Stock Exchange, the document showed. Benchmark size traditionally means upwards of $500 million.

Wakala, in which one party manages assets on behalf of another, is becoming the structure of choice for many sukuk issuers, especially financial institutions, because of its clearer link to the assets backing the instrument.

Credit Agricole, Dubai Islamic Bank, Emirates NBD, HSBC, National Bank of Abu Dhabi, Noor Bank and Standard Chartered will arrange the sukuk sale.