Boeing, a leading aircraft manufacturer, said today that commercial financial institutions in the Middle East are increasingly funding the region’s record number of airplane deliveries.
Boeing forecasts that airlines in the Middle East will require 2,610 new airplanes over the next 20 years, worth an estimated $550 billion. While one-third of that demand – 900 airplanes – will replace today’s fleets, 66 percent of the demand is expected to be driven by the rapid fleet expansion in the region.
Tim Myers, vice president and managing director of Aircraft Financial Services for Boeing Capital Corporation, said bank funding for airplane deliveries is becoming a global industry and the Middle East is playing an increasingly significant role.
“Last year alone, more than 65 per cent of all deliveries to airlines in the Middle East were funded from within the region,” Myers said. “Over the past few years we have seen great success by Middle Eastern banks and investors providing sources of financing for the Middle Eastern carriers, but they have been expanding outside the region by providing equity, debt, Islamic Financing options and more.”
Myers and Jeff Johnson, president of Boeing Middle East, hosted more than 180 of the region’s leading aircraft financiers and investors at its annual conference in Dubai.
“The health of the Middle East’s air travel industry and the sustained performance of commercial aircraft assets continue to create good investment opportunities, which was well reflected in the strong attendance at our financiers and investors conference,” Johnson said.
“This regional growth is not expected to slow down in the near future,” Johnson added. “Dubai air traffic has been consistently growing between 5 and 7 per cent annually, higher than the global average of 3.5 per cent. Abu Dhabi International Airport reported a 21.7 per cent year-over-year traffic increase in July, and the Hamad International Airport in Doha has handled more than 2 million passengers since its opening in April. With key regional players making significant leaps in aerospace infrastructures, I have no doubt that the Middle East will continue to outpace other markets in travel industry growth for some time.”
This traffic growth is being matched by growth in local aircraft asset financing. “We are particularly pleased to see increasingly greater diversification in the source of funding as airlines seek to finance these new airplanes,” Myers said.
The Dubai conference is one of five that Boeing hosts in major aircraft financial centres annually to provide market updates and address investor questions on aircraft investment opportunities.
Abu Dhabi in group bidding to buy Reebok
An investor group that includes funds affiliated with the Abu Dhabi government and a Hong Kong-based private equity firm is launching a bid to buy Reebok from Adidas AG for about $2.2 billion, the Wall Street Journal reported on Sunday.
Jynwel Capital, a private equity investment and advisory firm run by Jho Low, and the Abu Dhabi government-affiliated funds planned to make the offer imminently in a letter to Adidas directors, the Journal reported, citing unnamed sources close to the matter.
The investors are expected to argue that Reebok would do better if it were managed independently, the Journal reported.
Adidas spokespeople did not immediately return emailed requests for comment. A Jynwel Capital spokesperson said, “We continually evaluate unique investment opportunities globally but we don’t comment on rumors or speculation.”
The investors believe Reebok would benefit from management and ownership that would be better able to focus on improving Reebok’s business in the US outside the scrutiny of public shareholders, but want to maintain Reebok’s current strategic path and keep its top executives, the Journal reported, citing unnamed sources close to the bidders.
The investor group also wants to give Reebok more financing for marketing and store rollouts, the Journal reported, citing the sources.
The group first approached Reebok’s management late last year about establishing a joint venture to roll out high-end fitness brands and build dozens of stores in the US and internationally, the Journal reported.
The investor group later decided to make a bid for the entire Reebok business as the discussions progressed, the Journal reported. It is unclear which Abu Dhabi fund would partner with Jynwel should the Reebok bid succeed, nor how receptive Adidas might be to the bid, the Journal reported.
There is also no assurance the bid would be successful, the Journal reported.
Germany’s Adidas, the world’s second largest sports apparel firm, bought the US-headquartered Reebok in August 2005 for $3.8 billion. It enjoyed initial success with a range of toning shoes, but has since struggled.