Dubai Islamic Bank secures first Islamic lease agreement with Turkish Airlines
Turkish Airlines has taken a significant step forward in its cooperation with leading institutions in the UAE and the Gulf region, as it signed a financing agreement with Dubai Islamic Bank (DIB) on Monday for the acquisition of Airbus A350 aircraft. This deal marks the beginning of a new phase in Turkish Airlines' financial strategy, introducing Shariah-compliant Islamic finance into its funding approach.
The transaction, which is a first for Turkish Airlines, emphasizes both innovation and international cooperation. It utilizes an Ijarah arrangement (Islamic finance lease) denominated in Swiss francs, bridging the gap between a major Turkish carrier and the world's first Islamic bank, thereby strengthening economic ties between Türkiye and the UAE/Gulf region.
The significance of this deal lies primarily in Turkish Airlines’ first-ever financing agreement with DIB, signaling greater diversification and innovation in the airline’s financial strategy. It represents Turkish Airlines’ commitment to embracing sustainable, globally resilient Islamic finance, which is no longer seen as niche but as a relevant financial structure with growing international recognition.
This partnership not only supports Turkish Airlines’ fleet expansion and strategic growth but also exemplifies a broader chapter of international cooperation and financial innovation rooted in mutual ambition and trust between two significant regional economies.
The agreement supports Turkish Airlines' ongoing fleet expansion program, including the acquisition of new-generation wide-body aircraft. It is the first time such a transaction has been included in Turkish Airlines' financing portfolio, signifying a new direction in the airline's financing policy.
Dr. Adnan Chilwan, DIB's Chief Executive Officer, described the transaction as a "key milestone" for the industry. Turkish Airlines Chairman of the Board and Executive Committee, Professor Ahmet Bolat, and other high-ranking officials were present at the ceremony to formalize the agreement at Turkish Airlines' General Directorate VIP Lounge in Istanbul.
The deal underscores the increasing relevance of Islamic finance in global markets, as stated by Dr. Adnan Chilwan. By incorporating alternative financing models such as Islamic leasing, Turkish Airlines continues to align its capital structure with international market practices. This move is expected to encourage broader adoption of Islamic finance in the global aviation sector.
Turkish Airlines, which holds the Guinness World Record for flying to the most countries, is a pioneer in terms of scale, vision, and global leadership. This transaction is yet another testament to the airline's forward-thinking approach and commitment to financial innovation.
[1] Islamic Finance Introduction - First use of Shariah-compliant funding by Turkish Airlines, signaling greater diversification and innovation.
[2] Financial Structure - An Ijarah lease (Islamic finance lease) structure denotes a compliant leasing solution avoiding interest.
[3] Currency & Market - Borrowing in Swiss francs reflects global financial sophistication and risk management.
[4] International Cooperation - Enhances economic ties between Türkiye and the UAE, promoting deeper cooperation with Gulf financial institutions.
[5] Industry Impact - Affirms Islamic finance’s credibility and resilience in global aviation financing, encouraging broader adoption.
- Turkish Airlines has introduced Shariah-compliant Islamic finance into its funding approach for the first time, signaling a significant step in the diversification and innovation of its financial strategy.
- The financing agreement with Dubai Islamic Bank (DIB) utilizes an Ijarah arrangement (Islamic finance lease), denominated in Swiss francs, marking a compliant leasing solution that avoids interest.
- The deal between Turkish Airlines and DIB not only strengthens economic ties between Turkey (Türkiye) and the UAE, but also promotes deeper cooperation with Gulf financial institutions.
- The incorporation of alternative financing models such as Islamic leasing by Turkish Airlines is expected to encourage broader adoption of Islamic finance in the global aviation sector, highlighting its relevance in global markets.
