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Selling Emirates Airline could "make sense", admits vice chairman

By Shane McGinley 6 May 2012
Selling Emirates Airline could "make sense", admits vice chairman  Emirates Airline executive vice chairman Maurice Flanagan spoke to Arabian Business.

Sir Maurice Flanagan, executive vice chairman and one of the founders of Emirates Airline, has revealed that “it would make sense” to sell the airline in the future, in order to help service Dubai’s mountain of debt. Experts estimates that such a sale would generate up to US$11bn.

“I wouldn’t like to see it happen,” Flanagan said when asked if the airline, the largest in the region and one of Dubai’s most prized assets, would ever be sold. However, he conceded it had not been ruled out as a source of revenue to help finance Dubai’s debts, estimated by the IMF to be around $109bn.

“I don’t think it is being seriously thought of, but the time might come when it would make sense to do that,” Flanagan added, in an interview to be published in Arabian Business next Sunday.

When asked who potential buyers would be, he said: “It would depend on which markets it is opened to.”


Saj Ahmad, chief analyst at StrategicAero Research, said such a sale would generate a lot of interest and could result in a payday of up to US$11bn for Emirates’ owners.

“Emirates would be valued somewhere between $9bn-$11bn at today's prices, based largely on its widebody dominated fleet and its burgeoning net cash assets that amount to over $4bn,” Ahmad said.

“Selling even a fraction of it would reel in a significant windfall… clearly, many banks, large institutional investors and hedge funds would line up round the block to own a slice of Emirates - but they are in for a long and painful wait. Emirates asset value is probably the strongest of any airline in the world and is now more sought after than at any time since the carrier started operations in 1985.”

Flanagan was one of the principle founders of the airline when it was established with $10m in capital from the Dubai government.

“I was given US$10m by Sheikh Mohammad in 1985 and told don’t come back for any more or subsidy of any kind or protection of any kind,” Flanagan recalled.

While profit for the six months to Sept 30, 2011, fell 76 percent to $225m, as rising cost fuel costs and regional unrest squeezed margins, revenue was up 15 percent to $8.17bn.

Despite Dubai’s debt problems, which has seen it restructure over US$100bn owed to creditors and banks, Flanagan said Emirates has never had any issues getting financing and it has always received a favourable response from banks and investors.

“We have never had any trouble getting finance or getting a bond oversubscribed. Six times that last one was oversubscribed, which shows what the market thinks of us,” he said.

Emirates will issue its latest half year financial later this week.

*The full exclusive interview with Sir Maurice Flanagan will be published by Arabian Business on Sunday, May 13.

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