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Where is Emirates Airline heading?

Where is Emirates Airline heading?

As the IATA announces that the airline industry should buck up for the coming months, reports suggest that Emirates may have a new backer.

November 30, 2008 12:07 by

The International Air Transport Association (IATA) has just announced that international passenger traffic worldwide declined by 1.3 percent in October, compared to the same month in the previous year. While the Middle Eastern airlines have recorded a 3.5 percent growth, the IATA forecasts that regional carriers can expect a continued slowing of growth.

“We are gathering information, looking at trends around the world of travel and tourism, and having daily meetings,” Khalid Ahmad Bin Sulayem, director general of Dubai’s Department of Tourism and Commercial Marketing, said last week. Dubai may revise its target of attracting 15 million tourists a year by 2015 “depending on the feedback we get,” Bin Sulayem added.

But Emirates doesn’t seem to be too worried. The carrier’s president Tim Clark told Reuters that it will take delivery of its fourth Airbus A380 by year-end as planned. He also said that Emirates expects to receive its fifth plane before the end of March 2009.

Earlier this month, Emirates Airline reported an 88 percent drop in its net profit for the half year to 30 September. The carrier’s net profit was $77 million, as compared to around $640 million in 2007.

According to an article in The Times, Abu Dhabi is demanding a stake of the airline, as the price of a multi-billion pound cash injection for Dubai. The airline is currently estimated to be worth about $15 billion.

Government sources in Dubai reportedly confirmed last week that talks for funds had begun with Abu Dhabi. (Dubai has been badly affected by the global financial crisis, with several real estate companies stalling projects and laying off staff.)

The report also states that Abu Dhabi may plan to pursue Emirates’ emerging plans to list on the Dubai Stock Exchange.

While the report has not been verified, several rumors have emerged that Dubai is turning to its richer neighbor for help. And if giving up a part of Emirates is part of Abu Dhabi’s bailout plan, will Dubai do it?

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1 Comment

  1. Gergana Mineva on November 30, 2008 6:35 pm

    “Rumors abound and this is one of many�

    Suggestions have emerged over the past few days that the United Arab Emirates carriers could be considering tighter forms of co-operation. Rumors between Emirates Airlines pilots’ families spread that Abu Dhabi’s Etihad Airways will form a merger with Emirates Airlines.

    According Middle Eastern carrier Emirates’ management insists it has not received any indications from its Government owners regarding a possible tie-up with neighboring carrier Etihad Airways.

    Emirates Airline produced a net profit of Dh 284 million (US $77 million), for the first six months of its current financial year ending 30th September 2008. This is down 88 per cent compared to Dh 2.36 billion ($643 million) net profits for the same period in 2007, showing the impact of the record fuel prices earlier this year.

    Emirates Airline’s president Tim Clark, tells ATI: “We have had no instructions, intimations or guidance from our owners, whatsoever.�

    Speculation has increased over Dubai debt levels, which reportedly exceed its gross domestic product, and whether Abu Dhabi could step in to pick up shareholdings in Dubai-based companies.

    “Rumours abound and this is one of many,� says Clark.

    Abu Dhabi-based Etihad is firmly denying that any discussions are taking place over a link with Emirates.

    “Etihad’s policy is normally not to comment on speculation. However, in this case we can categorically state that there are no talks – either formal or informal – about any possible merger and acquisition activity between Etihad Airways and Emirates,â€� insists a spokesman for Etihad.

    Last year Etihad stated that it was examining the potential for co-operation with Emirates, to take advantage of combined purchasing power, although this was limited to non-competitive areas.


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