Airblue

Summary of Proposed Investment

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.

Project number	25272
Company name	Airblue Limited
Country	Pakistan
Sector	Transportation and Warehousing
Environmental category	B
Department	Infrastructure
Status	Pending Disbursement

Date SPI disclosed	June 11, 2007
Projected board date	July 12, 2007
Previous Events	Signed: November 21, 2007 Approved: August 29, 2007

View Environmental & Social Review Summary (ESRS), click here

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

Airblue Limited (Airblue or the company), launched in June 2004 in Pakistan, operates a fleet of six A320 family aircraft providing high quality service on domestic routes as well as Dubai, UAE. The IFC project consists of $22 million for the financing of pre-delivery payments towards the purchase of six Airbus A320 aircraft.

Anticipated development impact of the project

Affordable, efficient and high quality airline services are vital in Pakistan, given the substantial distances between major urban centers and inadequate land transportation infrastructure. Airblue provides improved connectivity among cities in Pakistan and between the country and other international destinations through its flights. In addition, Airblue’s successful operations promote competition to other existing carriers including PIA, the state-owned carrier, which should lead to an improvement in the efficiency of the entire air sector.

IFC's expected development contribution

Sourcing financing for a private airline in Pakistan from commercial sources is very difficult in the absence of a guarantee from an export credit agency. The support of IFC will help Airblue to undertake its expansion program and support a well-run airline that is playing a crucial role in the overall growth of the country.

Environmental and social issues - Category B

Based on review of the project information, key social and environmental issues associated with the project include: safety management, employee training, aircraft maintenance, labor standards and social and environmental management systems. This investment has been provisionally categorized as B and will require at least 30 days disclosure by IFC prior to Board.

The following Performance Standards are expected to be applicable:

- PS1: Social and Environmental Assessment and Management System
- PS2: Labor and Working Conditions
- PS3: Pollution Prevention and Abatement

Air Blue has developed comprehensive plans to ensure compliance with Civil Aviation Authority (CAA) requirements and the requirements of the International Civil Aviation Organization (ICAO). The Company maintains detailed manuals with respect to air and ground operations covering all aspects of aviation, flight operations, maintenance, crew procedures and aircraft handling. All Airbus Maintenance Review Board (MRB) and Maintenance Planning Documents (MPD) are followed by the company as are FAA Airworthiness Directives (AD). Major services are performed by international airlines (e.g., PIA, Air France, Sri Lankan, Egypt Air) and other major contractors based in Dubai and the UK. Aircraft holds are equipped with smoke detectors and ground equipment includes fire fighting equipment in the apron area as required by the CAA. No hazardous materials/cargo are transported or handled by the company. All major maintenance and catering services are outsourced to third parties who service the national airline and other international airlines. No fuel is stored or handled by the company. Air Blue only conducts Line Checks and A Checks (these do not involve use of or replacement of fluids/oils); any used parts are returned to suppliers. Waste from aircraft cleaning is disposed of by licensed contractors at designated sites. As part of a corporate sustainability initiative the company has embarked upon an ambitious exercise to plant 1 million trees through local community involvement. This will assist in revenue generation for communities (from timber and fruit) and help offset carbon emissions associated with Air Blue’s operations. It should be noted that there are currently no carbon credits available for sequestration, however from a corporate responsibility point of view this is a positive initiative. Air Blue also has an initiative to operate a paperless office and in support of this has an e-ticketing system. An ESRS will be released through IFC's external website.

IFC PROJECTS