RJA enters US $15 million Murabaha agreement

Citi Islamic Investment Bank Bahrain arranges Murabaha facility for Jordan’s national carrier.

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By  David Ingham Published  September 22, 2002

Royal Jordanian Airlines has entered into a US $15 million Murabaha agreement with Citi Islamic Investment Bank Bahrain, a subsidiary of Citigroup. Citi Islamic Investment Bank is the sole arranger for the transaction, with participation from Citibank N.A., Kuwait Finance House and Bank Al-Jazira.

“Citi Islamic Investment Bank is extremely pleased to conclude its second Islamic finance transaction in Jordan this year and to bring a diverse investor base to Royal Jordanian, Jordan's national carrier,” said Suhair Al Ali, general manager of Citibank Jordan.

“The strong level of interest from regional Islamic banks has come as a result of Royal Jordanian’s resilient and improved operating performance over the past year. It is clearly yet another vote of investor confidence in Jordan and in Royal Jordanian.”

RJ says it will use the money to modernise its fleet and to help with its restructuring program.

“This syndication is in line with the company’s strategy to restructure its finances and to modernize its existing fleet through the recent entry of two A340s that will allow the launch of non-stop routes to both New York and Bangkok and converting two of RJ’s passenger aircraft to freighters to provide RJ’s cargo operations with more efficient and reliable aircraft,” says Eng. Samer Al Majali, CEO of Royal Jordanian.

“Royal Jordanian has been successful, through restructuring and privatisation, in significantly reducing its debt burden with only US$ 80 million in capital lease obligations. We are pleased that Citibank is assisting us in our restructuring initiatives.”

This is Citi Islamic Investment Bank’s second major recent transaction in Jordan. The company earlier concluded a US $22 million syndicated Ijara transaction for mobile operator Fastlink.

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