RIYADH: 海角直播鈥檚 Riyadh Air has secured a $1.3 billion credit facility from a consortium of Gulf banks to fund its upcoming launch in 2025, according to the airline鈥檚 chief financial officer.
Speaking to Arab News at the Future Investment Initiative in Riyadh, taking place from Oct. 29 to 31, Adam Boukadida described this as the airline鈥檚 first corporate finance deal.
This initiative aligns with Riyadh Air鈥檚 goal, backed by the Kingdom鈥檚 Public Investment Fund, to serve over 100 destinations by the end of the decade through strategic partnerships.
鈥淭his is the first corporate finance deal for Riyadh Air. We鈥檙e very excited about that. It鈥檚 for up to SR5 billion. It鈥檚 what is called an accordion structure,鈥 Boukadida said.
He noted that the transaction involves six Saudi banks, including聽Gulf International Bank, and two financial institutions from outside the Kingdom, one of which is聽Emirates NBD from Dubai. 鈥淲e鈥檝e got a complement of local and regional powerhouses to support us in our first transaction,鈥 he added.
The CFO explained that the transaction is for 12 months, with an option to roll over and extend, which the company anticipates will occur. The funds will serve as the backbone of the airline鈥檚 balance sheet and will be utilized for general corporate purposes as needed.
鈥淚t is in Saudi riyals and it鈥檚 very well priced. We have a great credit rating, of course. There鈥檚 a strong belief from our banking partners about the purpose of this and the importance of being part of the first syndicated revolving credit facility,鈥 he said.
Since the company is currently non-operational, Boukadida mentioned that they may consider various financial instruments in the future, including debt, capital markets, and bonds. 鈥淚t鈥檚 really good financial practice to start and support and build out your balance sheet with what would be called a club or syndicated loan there for working capital benefits and requirements,鈥 he explained.
Boukadida also highlighted that the airline plans to have just 130 aircraft over the next five years. 鈥淚n aviation, especially with the size and scale we鈥檙e looking to achieve at Riyadh Air, we explore many creative financial solutions in the future, whether that be leasing or mortgage-type aircraft financing transactions,鈥 he said.
Regarding a recent agreement with Aramco, which was signed during the FII, Boukadida said, 鈥淚t鈥檚 likely that Aramco will be our biggest fuel supply source.鈥 He said the two companies want to jointly explore ways to make the aviation industry more sustainable.
On sustainable aviation fuel, he said聽affordability remains a significant challenge. 鈥淕enerally speaking, sustainable aviation fuel, or SAF, is about three or four times more expensive than normal jet fuel. So that鈥檚 something that needs to be addressed for sure,鈥 he remarked.
Shifting to digitization, Boukadida discussed the airline鈥檚 ambition to provide an Amazon-like experience. 鈥淲e鈥檙e a digital company that enables travel rather than a traditional legacy airline,鈥 he said. 鈥淲e will offer, and we announced it yesterday, version 1.0 of what we call 鈥榦ffer and order.鈥 It鈥檚 very similar to an Amazon experience or, in the region, a noon.com experience where you do your basket online retail shopping,鈥 he added.
