Emirates Airline: A Billion-dollar Sukuk-Bond Issue
(7 pages of text)
Emirates Airline (EA) needs to fund the purchase of 30 new A380 aircraft. On March 11, 2013, EA announced plans to issue US$1 billion of Islamic bonds (sukuk) and $750 million of regular bonds. These bonds arguably share similar risks and seniority even though the sukuk bonds sold with a lower implied yield. This difference in pricing for securities with similar default risks seems at odds with conventional finance thinking. Against this backdrop, the EA treasury department must decide on the appropriate funding for this next batch of A380 airplanes.
This case is designed for a course in corporate finance or financial management that covers funding investments or raising capital. Additionally, it can be used in courses on portfolio management or fixed income that involve bond pricing. Alternatively, the case could be used in a module on corporate strategy that focuses on strategic financing choices. The case facilitates discussions on Islamic finance and emerging markets (in particular, Dubai).
Transportation and Warehousing
United Arab Emirates, Large, 2013
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