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Wednesday, 4 July 2007

National Air Services to issue Islamic bonds to finance new jets

National Air Services, the Saudi Arabian operator of the largest fleet of private planes in the Middle East, will raise financing for 15.5 billion riyals' worth of previously announced plane orders through loans and sales of Islamic bonds. "One of the instruments that NAS will pursue is Islamic sukuk to finance the acquisition of aircraft," the chief executive, Taher Agueel, said Sunday during an interview from Saudi Arabia, referring to Islamic bonds. "We are in the process of getting local and international financial institutions to conclude such a proposal and the overall strategy of financing." National Air Services, also known as NAS, will raise the equivalent of $4.1 billion through the bonds and loans. The Islamic bonds known as sukuk are likely to be listed on the Saudi stock exchange, Agueel said. He reiterated NAS's plan to sell at least 30 percent of its shares next year. NAS placed 98 aircraft orders and commitments this year that will increase the company's fleet to 142 planes by 2012. NAS pledged to buy 20 Airbus A320s with an option to buy 18 more at the Paris Air Show last month. If NAS exercises its option, the order would be valued at $2.77 billion. The planes will be used by the company's low-cost carrier NAS Air, which began operating in February after receiving a license from the Saudi General Authority of Civil Aviation in December. The privately held company, based in Riyadh, manages 47 aircraft, the largest fleet of private planes in the Middle East. It offers aircraft management services and is a regional partner of NetJets, the business-jet charter company owned by Berkshire Hathaway, which is controlled by the billionaire Warren Buffett. The company ordered 20 Falcon 2000 LX corporate jets last month valued at more than $500 million from Dassault Aviation to be used for the NetJets program. NAS ordered three Gulfstream Aerospace G450s in May and took options for an additional 17, valued at more than $700 million. In January, the company bought 20 Raytheon Hawker 750 aircraft valued at more than $250 million. Economic growth and diversification has increased demand for business jets in the Middle East. The region, the third-largest market for business jets after the United States and Europe, represents about 8 percent of the overall potential private aircraft market, the business-jet maker Bombardier has said. National Air Services' revenue in 2006 was 500 million riyals, and the company expects it to reach 3 billion riyals by 2011. -(Bloomberg, 2 July 07)

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