Boeing sees opportunity in Islamic finance but no concrete plans in the pipeline

Although Boeing Capital does not have any immediate plans to offer Islamic financing products, MARC ROUSSOT finds that the company sees opportunities to foray into Islamic finance for the funding of aircraft.

While Airbus has long tapped Islamic finance with the launch of an aircraft-leasing fund in 2014, Boeing is still lagging behind. However, the aircraft manufacturer is not closing the door on the development of a Shariah offering.

The subject is on the table and is being discussed with numerous parties, Joanna Pickup, from Boeing Capital’s communications department, tells IFN.

“We are now seeing the opportunity for expansions in the financing of aircraft from delivery payments, leases and capital market offerings that can satisfy the appetite of investors across the capital spectrum,” Pickup says.

The development by Boeing of a portfolio of Islamic solutions has been up in the air over the past few years, and a recent statement from Vasgen Edwards, Boeing Capital’s managing director for MENA customer finance, revived speculations on the launch of such Shariah offerings.

Talking to the press on the sidelines of the Global Investment Aviation Summit in Dubai, Edwards mentioned a possible partnership with a bank or financial institution in the region to develop Islamic aircraft financing products.

In its very early stage, the potential partnership could be based in the UAE or Saudi Arabia, with the company also considering other locations in the wider MENA region, Edwards was quoted as saying.

Rolling out Islamic products, especially Ijarah-based solutions, would help Boeing Capital further tap the soaring aircraft leasing market, partly boosted by the growth of Gulf companies like Qatar Airways and Emirates Airline, and forecasted to be worth US$62.22 billion by 2023, according to Market Research Future.

Nevertheless, currently, the financing arm of Boeing is not planning on offering its own (Boeing Capital-led) Islamic financing products and has not set a timeline nor location, Pickup says. “We also have not targeted specific banks nor financial institutions,” she adds.

This article first appeared in IFN Volume 16 Issue 06 on the 13th of February 2019

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