DUBAI- Etihad Airways, wholly owned by the Abu Dhabi government, is planning to sell U.S. dollar-denominated 'transition' sukuk, or Islamic bonds, a document issued by one of the banks leading the deal showed.

Proceeds of so-called transition bonds are used by companies to gradually switch to more environmentally sustainable operations.

Etihad's plans include using more fuel-efficient planes and eliminating single-use plastics, according to an investor presentation. The airline aims to cut its 2019 carbon emissions level in half by 2035 and to zero by 2050.

Etihad has hired HSBC and Standard Chartered as joint global coordinators and "joint sustainability structuring agents" for the planned deal.

Abu Dhabi Islamic Bank, Dubai Islamic Bank, Emirates NBD Capital, First Abu Dhabi Bank and Mashreq Bank will also be involved in the transaction.

The planned sukuk, which will be issued depending on market conditions, will have a five-year maturity and are part of a $3 billion sukuk programme expected to be rated 'A' by Fitch.

A series of fixed income investor calls ahead of the deal will begin on Oct. 22, the document said. One source familiar with the deal said the transaction is likely to be at least $1 billion in size.

The airline has also invited holders of its outstanding $1.5 billion sukuk due in 2021 to tender those notes for purchase by Etihad for cash, the document said.

Etihad did not immediately respond to a request for comment.

(Reporting by Davide Barbuscia and Yousef Saba; editing by Louise Heavens and Nick Zieminski) ((Davide.Barbuscia@thomsonreuters.com; +971522604297; Reuters Messaging: davide.barbuscia.reuters.com@reuters.net))