Etihad becomes first airline to issue sustainability-linked Sukuk

Filed on October 29, 2020 | Last updated on October 29, 2020 at 12.25 pm

The $600 million transactions will support Etihad’s drive for sustainable aviation by linking the sukuk terms to carbon reduction targets.

Etihad Airways has announced the launch of the world’s first Transition Sukuk and the first sustainability-linked financing in global aviation, under a Transition Finance Framework.

According to Etihad, this follows the first aviation financing linked to the United Nations Sustainable Development Goals raised in December 2019, further confirming Etihad’s role as an industry leader in sustainable finance.

The $600 million transaction will support Etihad’s drive for sustainable aviation by linking the sukuk terms to Etihad’s carbon reduction targets: A commitment to Net Zero Carbon emissions by 2050; a 50 per cent reduction in net emissions by 2035; and a 20 per cent reduction in emissions intensity in the airline’s passenger fleet by 2025.

Commenting on the announcement, Adam Boukadida, chief financial officer of Etihad Aviation Group, said: "Sustainability and responsible climate action are the most significant challenges facing the aviation industry. As the UAE’s flag carrier, Etihad is committed to sustainable development in aviation in line with Abu Dhabi’s vision.

"By issuing a Sustainability-Linked Sukuk, Etihad is voluntarily adding to its existing commitments under CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation), and also committing to reduce carbon emissions intensity by over 20 per cent from the 2017 baseline."

HSBC and Standard Chartered Bank acted as joint global coordinators and joint sustainability structuring agents. Abu Dhabi Islamic Bank, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, and Standard Chartered Bank acted as joint lead managers & bookrunners. Abu Dhabi Commercial Bank acted as joint lead manager while Mashreq Bank acted as financial advisor.

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