Text size:

  • Small
  • Normal
  • Large

UAE airlines face higher borrowing costs for aircraft

Rules that made it easier for airlines in developing countries to finance aircraft purchases are to be phased out.

UAE airlines will face higher borrowing costs for new aircraft soon after the Organisation for Economic Co-operation and Development agreed to revise rules concerning government-backed export credits.

The agreement, which was reached on Tuesday but still needs to be ratified by each member state by January 20, will phase out rules that made it easier for airlines in developing countries to finance aircraft purchases.

Previously, airlines based outside of Europe and North America have been eligible for financial guarantees and insurance provided by export credit agencies. This led to cheaper financing terms compared with airlines based in the five countries where Airbus and Boeing planes were manufactured. The rules that are being revised were first applied in 1986, in order to prevent a trade war.

“The proposed terms  - following extensive negotiations at the OECD – would move fees closer to market rates and allow for regular adjustments to reflect market development,” the organization said in a statement.

With the revisions, Airbus and Boeing can deliver planes through 2012 with the current state-backed financing terms, said Steven Tvardek, a negotiator with the Paris-based OECD. The waiver also applies to 138 planes ordered from the two airliner manufacturers before May 2007, he said.


Emirates and Etihad have used export credits in the past to finance a portion of their aircraft purchases, and both have billions of dollars of aircraft still on order with deliveries spread out over the decade.

igale@thenational

-With Bloomberg

Back to the top

More articles


Editor's Picks

 Marina Square apartments Reem Island: Q1 2% rise. Studio - Dh65-68,000. 1BR - Dh75-95,000. 2BR - Dh110-145,000. 3BR - Dh170-190,000. Q1 2013-Q1 2014 no change. Sammy Dallal / The National

In pictures: Where Abu Dhabi rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Abu Dhabi have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 A Brabus Mercedes 6x6 Sports Utility Vehicle is readied for display during Auto China 2014 in Beijing, on April 20. Adrian Bradshaw / EPA

In pictures: Auto China 2014 exhibition

Leading automakers have gathered in Beijing for the kickoff of China’s biggest car show, but lacklustre growth and environmental restrictions in the world’s largest car market have thrown uncertainty into the mix. More than 1,100 vehicles are being showcased.

 The New York Stock Exchange. Rising interest rates will shift momentum away from bonds and back towards risk assets such as stocks. Richard Drew / AP Photo

Plan ahead for rising interest rates

It is now over five years since the majory central banks slashed interest rates to record low but that is all about to change. So, how will rising interest rates affect you?

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.

Events

To add your event to The National listings, click here

Get the most from The National