World’s first ‘transition sukuk’ issued by Etihad to support sustainability goals

Abu Dhabi’s Etihad Airways, the national airline of the United Arab Emirates has issued the world’s first transition sukuk and the first sustainability-linked financing in global aviation, under a Transition Finance Framework.

The issuance is in line with the first aviation financing linked to the United Nations Sustainable Development Goals (SDG) which came in December 2019, further ensuring Etihad’s commitment to sustainable finance.

Etihad Airways has issued a $600 million sukuk which will support its sustainable aviation targets. The terms of the Sharia-compliant sukuk will include the airline group’s carbon reduction targets which is to to reach net zero carbon emissions by 2050, a 50 percent reduction in net emissions by 2035 and a 20 percent reduction in emissions intensity in the airline’s passenger fleet by 2025.

The aviation group has taken many other sustainability initiatives including induction of the latest-generation, most fuel-efficient aircraft, including additional Boeing 787 Dreamliners. The airline is also working on the development of sustainable aviation fuels and to reduce 80 percent of single-use plastics by 2022.

“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, and also committing to reduce carbon emissions intensity by over 20% from the 2017 baseline.”

HSBC and Standard Chartered banks were joint global coordinators and sustainability structuring agents for the deal. Abu Dhabi Islamic Bank, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank, HSBC and Standard Chartered Bank acted as joint lead managers and book runners.