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Rumour: Emirates-Etihad Merger  
User currently offlineNA From Germany, joined Dec 1999, 10817 posts, RR: 9
Posted (6 years 4 weeks 4 hours ago) and read 19371 times:

In the wake of the worldwide financial turmoil Dubai has been hit hard. According to Germany´s leading business newspaper, Handelsblatt, Dubai is in severe trouble and calls for help. Abu Dhabi appears to be willing to invest billions. Among the possible scenarios could be a merger of the Emirates two leading airlines, Emirates and Etihad.

43 replies: All unread, showing first 25:
 
User currently offlineOzarkD9S From United States of America, joined Oct 2001, 5222 posts, RR: 21
Reply 1, posted (6 years 4 weeks 4 hours ago) and read 19356 times:

So this becomes Gulf Air Mk II? Oh, the irony.


The best IFE: A window seat and a good book.
User currently offlineOlle From Sweden, joined Feb 2007, 315 posts, RR: 0
Reply 2, posted (6 years 4 weeks 4 hours ago) and read 19345 times:

Some airbus managers is bitting thair nails.....

User currently offlineSingapore_Air From United Kingdom, joined Nov 2000, 13745 posts, RR: 19
Reply 3, posted (6 years 4 weeks 4 hours ago) and read 19249 times:

I don't think so............


Anyone can fly, only the best Soar.
User currently offlineIkramerica From United States of America, joined May 2005, 21580 posts, RR: 59
Reply 4, posted (6 years 4 weeks 4 hours ago) and read 19198 times:

Dubai is way way overbuilt and their economy depends on building even more. Long term, it might make sense, but right now, it's dangerous. Abu Dhabi has been less aggressive with it's growth plans.


Of all the things to worry about... the Wookie has no pants.
User currently offlineLightsaber From United States of America, joined Jan 2005, 13520 posts, RR: 100
Reply 5, posted (6 years 4 weeks 4 hours ago) and read 19127 times:
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Quoting NA (Thread starter):
Among the possible scenarios could be a merger of the Emirates two leading airlines, Emirates and Etihad

Source?

I really doubt this. Abu Dhabi wants to remain clearly the dominate emirate. If Dubai merges... it would force it into a permanent 2nd place status.

Now, I've been absolutely fascinated by Dubai and EK for a few years now. I'm well aware Dubai over-borrowed and will have a revolving debt issue coming up. But its not here yet... and they seem to able to get just enough cash to keep moving forward.

EK is the lowest cost long haul airline. Personally I think they'll survive ok. But... I also recall the old maxim, "A fast growing business needs to borrow." Since borrowing is... tough at this time, there growth will have to slow. I see several things happening:

1. Delayed deliveries. This will be on 777's (77W and in particular 77L's), A380's, and A333's. This will crimp Dubai's ambitions to become an aircraft leaser.

2. Near halt to Dubai construction. Except for trying to get some of the amusement parks going and a small number of additional hotels (e.g., Holiday Inn express and other lower cost hotels), I see them having to return many of the forest of cranes. That also means returning 'guest workers.'

But actually partner with Etithad?  no  Dubai has been able to negotiate a few of the bi-laterals independent of the other Emirates. In effect, a merger would force EK to surrender flying rights to EY. That would weaken the hub too much.

Not to mention the merger makes no sense geographically. The hubs are *just* too far apart to function as a joint hub. Each exists to support its host city. The difference is that EK funnels a huge amount of cash into Dubai. EY has been requiring state capital.

It will be interesting to see if QR can keep up its growth. (I personally doubt it.)

There will be a shake out of airlines. But Dubai hasn't been the hardest hit in this financial shake out. They don't have to play the weak role... yet.

Let's have links:
Shopping down 20% in Dubai and loans to those who work for construction firms are cut off:
http://www.reuters.com/article/rbssF...ealEstateNews/idUSLK31758020081120

A quote that amused me:

Quote:
One Dubai-based dentist said business had fallen about 40 percent this year.

Dentists lose business early in a recession (or worse), then the business picks up! (Paternal side of the family survived the depression as dentists, the only profession who's incomes went up!)

Architects and staff being laid off ('redundancies' in British)  Wink
http://www.zawya.com/Story.cfm/sidZA...%20Continue%20As%20Scheduled%20%20

Bad? Yea. But Citibank is going to Dubai to try and save themselves...

Lightsaber



Societies that achieve a critical mass of ideas achieve self sustaining growth; others stagnate.
User currently offlinePanais From Cyprus, joined May 2008, 471 posts, RR: 0
Reply 6, posted (6 years 4 weeks 3 hours ago) and read 19010 times:

Abu Dhabi already has invested a lot of money at Emirates. It has financed most of the aircraft that Emirates is buying.

However, the funding will not stop, because Emirates finances most of their aircraft with Islamic Finance rules, which calls for some sort of profit sharing, which at the end is more profitable than depositing cash at the bank or buying Citibank shares.

Besides, in today's environment, is there any better investment than an A380?

I do not think that Emirates and Etihad will merge, because Emirates is not only the best run airline in the world but is the crown jewel of Dubai and the one that will bring all those tourists to stay at all those hotels.


User currently offlineFlyDreamliner From United States of America, joined Jan 2006, 2759 posts, RR: 15
Reply 7, posted (6 years 4 weeks 3 hours ago) and read 18681 times:

I doubt as if they'll merge (though in this market, who knows). I have said for a long time and continue to maintain that the growth of Persian Gulf (Arabian Gulf) airlines is vastly greater than their market, and at some point something has to give, and either they'll have to all scale back their expansion or one or more may be merged or may fail all-together.

EK may be low cost and well-run, but at some point, you have to wonder if their imprudently lofty ambitions might just be out of touch with reality.

I'm sure they'll defer delivery or reschedule to slow delivery on aircraft and take a more measured approach. At some point this will hit their bottom line.

Quoting Panais (Reply 6):
Besides, in today's environment, is there any better investment than an A380?

Seriously? Well, since EK has ordered 1 in 4 of the total and the resale on them is really fairly questionable, I'd say probably not the investment a 77W or A330 is at the moment. If you want to unload an A330 or 77W, you can all but name your price and it will move quickly.

Moving an A380 is, I would imagine, a bit trickier as fewer airlines have them in their fleets and they are a more specialized aircraft.

Quoting NA (Thread starter):
Dubai is in severe trouble

Well, when you attempt to build London, Tokyo, or New York in a decade, and on a grander scale, in a place with few actual residence in situ, limited established economy, and do it all on borrowed money, you really can't be that surprised when the house of cards comes tumbling down.

It shows states like Abu Dhabi and Qatar have been far more prudent. I guess the tremendous genius of Mohammed bin Rashid Al Maktoum is now somewhat in question.



"Let the world change you, and you can change the world"
User currently offlinePanais From Cyprus, joined May 2008, 471 posts, RR: 0
Reply 8, posted (6 years 4 weeks 2 hours ago) and read 18505 times:



Quoting FlyDreamliner (Reply 8):
Seriously? Well, since EK has ordered 1 in 4 of the total and the resale on them is really fairly questionable, I'd say probably not the investment a 77W or A330 is at the moment.

Absolutely seriously.

They bought the A380s at a large discount and there are other airlines who bought the other 3 in 4 of the total, who wouldn't mind getting their hands on an A380 that has been bought cheaper than they were paying, delivered much earlier and already operational.

The 77W and the A330 are so 90's and as soon as the 787 or the A350 are operational they will lose a lot of that resale value.


User currently offlineEmiratesUK From United Kingdom, joined Jan 2005, 288 posts, RR: 0
Reply 9, posted (6 years 4 weeks 2 hours ago) and read 18397 times:

Not convinced by this thread...

No hard evidence... EK have just posted another profitable year.. albeit significantly lower than previous years..

As the global economy weakens, the amount of support Dubai needs from the UAE federation to meet its debt repayments is being questioned. - that is the headline for a certain news company..

But has nothing to do with the airline...! I doubt we will see a merger of EK & EY...



EK A380 Private suite - Here I come!!
User currently offlineEK413 From Australia, joined Nov 2003, 5005 posts, RR: 4
Reply 10, posted (6 years 4 weeks 1 hour ago) and read 18289 times:



Quoting Ikramerica (Reply 4):
Abu Dhabi has been less aggressive with it's growth plans.

Perhaps Abu Dhabi has been cautious...

Quoting Panais (Reply 6):
Emirates is not only the best run airline in the world but is the crown jewel of Dubai

 crazy  Yes, I can agree to a point considering the carrier is subsidised by the government... My personal opinion would be the fact QF has earned title, one of the most profitable "Privatised" carries in the world... Thats what I call best run airline...

Quoting RL757PVD (Reply 7):
Sucks when the bubble bursts doesnt it....

Sure does  Wink Welcome to the real world EK...

EK413



Good evening, ladies and gentlemen. We are tonight’s entertainment!
User currently onlineStitch From United States of America, joined Jul 2005, 31391 posts, RR: 85
Reply 11, posted (6 years 4 weeks ago) and read 17677 times:
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Middle Eastern traffic did fall 2.8% so far this year, but compared to the rest of the world (even Asia dropped double-digits), that's not too bad a result.

Probably a bit early to be wringing the alarm bells, but we may see some deferrals (especially of "hot models" like the A330 and 777 that can quickly find homes with other carriers) if traffic continues to shrink.


User currently offlineTVNWZ From United States of America, joined Feb 2006, 2408 posts, RR: 2
Reply 12, posted (6 years 4 weeks ago) and read 17623 times:



Quoting Stitch (Reply 12):
Probably a bit early to be wringing the alarm bells, but we may see some deferrals (especially of "hot models" like the A330 and 777 that can quickly find homes with other carriers) if traffic continues to shrink.

In today's environment there are very few carriers willing to take on any models--hot or not. At least for the time being.


User currently offlineJacobin777 From United States of America, joined Sep 2004, 14968 posts, RR: 59
Reply 13, posted (6 years 4 weeks ago) and read 17553 times:

So far, the only t

Quoting NA (Thread starter):
According to Germany´s leading business newspaper, Handelsblatt, Dubai is in severe trouble and calls for help. Abu Dhabi appears to be willing to invest billions.

 checkmark ..This was reported yesterday on Bloomberg Television as well.

Some other interesting links as well.

http://www.ft.com/cms/s/0/498e4468-b59b-11dd-ab71-0000779fd18c.html

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=av1rX0jFJIZ4

Quoting Lightsaber (Reply 5):
Quoting NA (Thread starter):
Among the possible scenarios could be a merger of the Emirates two leading airlines, Emirates and Etihad

Source?

I really doubt this. Abu Dhabi wants to remain clearly the dominate emirate. If Dubai merges... it would force it into a permanent 2nd place status.

I agree, I'm not so sure about this one as well.. scratchchin 



"Up the Irons!"
User currently offlinePlaneInsomniac From Canada, joined Nov 2007, 681 posts, RR: 0
Reply 14, posted (6 years 4 weeks ago) and read 17360 times:



Quoting Lightsaber (Reply 5):
Source?

The OP mentioned Handelsblatt, which is one of Germany's oldest and most renowned business newspapers. Think Wall Street Journal with umlauts.

That article is actually online:
http://www.handelsblatt.com/politik/...soll-dubai-vor-ruin-retten;2094571

Quote: "So spekulieren Investmentbanker, dass sich die Nachbarn bei florierenden Unternehmen wie Emirates Airlines einkaufen und möglicherweise eine Fusion mit der heimischen Fluggesellschaft Etihad vorantreiben könnten."

My translation: "Investment bankers are speculating that [Dubai's] neighbors could buy parts of successful enterprises such as Emirates Airlines and possibly aim at a fusion with [their own] airline Etihad."



Am I cured? Slept 5 hours on last long-haul flight...
User currently offlinePlaneInsomniac From Canada, joined Nov 2007, 681 posts, RR: 0
Reply 15, posted (6 years 4 weeks ago) and read 17214 times:



Quoting EmiratesUK (Reply 10):
No hard evidence... EK have just posted another profitable year.. albeit significantly lower than previous years..



Quoting FlyDreamliner (Reply 8):
I have said for a long time and continue to maintain that the growth of Persian Gulf (Arabian Gulf) airlines is vastly greater than their market

The point that you all are missing that this is not about problems at EK. As a matter of fact, the opposite is the case: It is the emirate of Dubai that needs money, and they might sell a part of their very successful airline to get it. At least that is what the article says. Therefore, if anything, it shows how well EK is doing.



Am I cured? Slept 5 hours on last long-haul flight...
User currently offlineDZ09 From United States of America, joined Sep 2006, 492 posts, RR: 1
Reply 16, posted (6 years 4 weeks ago) and read 17009 times:



Quoting Ikramerica (Reply 4):
Abu Dhabi has been less aggressive with it's growth plans.

They're planning on building a completely brand new capital city outside Abu Dhabi. I consider that to be very aggressive.


User currently offlineIkramerica From United States of America, joined May 2005, 21580 posts, RR: 59
Reply 17, posted (6 years 3 weeks 6 days 23 hours ago) and read 16799 times:



Quoting FlyDreamliner (Reply 8):
It shows states like Abu Dhabi and Qatar have been far more prudent. I guess the tremendous genius of Mohammed bin Rashid Al Maktoum is now somewhat in question.

"Can we build a building 1 mile high?"
"Why not 2 miles! Three

Quoting PlaneInsomniac (Reply 16):
The point that you all are missing that this is not about problems at EK. As a matter of fact, the opposite is the case: It is the emirate of Dubai that needs money, and they might sell a part of their very successful airline to get it. At least that is what the article says. Therefore, if anything, it shows how well EK is doing.

Or how EK is claimed to be doing. Things have a way of shaking out when the books actually need to be opened for M&A study. Just as CO and UA. Or Microsoft and Yahoo. What might seem like a good deal from the outside turns out to be a bad deal at any price.

Considering the amount of intertwining of government and "private" business in Dubai, I've never been anything but skeptical re: EK's books. Not all books are real, even if they are audited and publicly traded. See Enron, Global Crossing, Williams, etc., etc.

Quoting DZ09 (Reply 17):
They're planning on building a completely brand new capital city outside Abu Dhabi. I consider that to be very aggressive.

And yet, it's still far less ambitious than what Dubai has been doing. Which is just insane to think about.

Pissing contests never end well. Eventually, you are just standing in a puddle of piss.  Wink

But of course, when many of us called out Dubai for it's extravagance in the past, we were called everything from naive to jealous to racist...



Of all the things to worry about... the Wookie has no pants.
User currently offlineJbernie From Australia, joined Jan 2007, 880 posts, RR: 0
Reply 18, posted (6 years 3 weeks 6 days 23 hours ago) and read 16704 times:



Quoting Lightsaber (Reply 5):
Source?

Didn't want to read the full 3 lines of the original post?

Quoting NA (Thread starter):
According to Germany´s leading business newspaper, Handelsblatt



Quoting Panais (Reply 6):
Besides, in today's environment, is there any better investment than an A380?

That depends on how many people are not flying. A 777 could be perceived as a better investment, but making that decision when buying an aircraft or a fleet of aircraft is pretty beyond us armchair aviation experts  Smile

For someone like QF who is wanting to retire aircraft etc and having some fleet issues the A380 is very positive, maybe as a counter, for someone like Air New Zealand and A380 might be seen as just about the worst investment.


User currently offlineIkramerica From United States of America, joined May 2005, 21580 posts, RR: 59
Reply 19, posted (6 years 3 weeks 6 days 23 hours ago) and read 16634 times:

We must also remember that EK's model is based on open skies and taking customers through Dubai as a waypoint.

During global economic crises, governments start to raise the protectionist flag (even if it's a bad idea). That means Dubai will have a lot harder time negotiating more frequencies or even keeping current open skies agreements in place when the local carrier runs to the government and points out the "predatory practices of the interloper."

EK is going to run up against protectionism all over the world if things really do get worse. After all, what does an open skies agreement with Dubai/EK offer the other nation? Unfettered access to Dubai, but that O&D market isn't very large, and tourism is going to be shrinking, not growing...



Of all the things to worry about... the Wookie has no pants.
User currently offlinePlaneInsomniac From Canada, joined Nov 2007, 681 posts, RR: 0
Reply 20, posted (6 years 3 weeks 6 days 23 hours ago) and read 16602 times:



Quoting Ikramerica (Reply 18):
Or how EK is claimed to be doing.

I was just trying to clarify the content of that article, which several people here have misinterpreted. I certainly do not claim to have any insight into the true state of affairs at EK.



Am I cured? Slept 5 hours on last long-haul flight...
User currently offlineIkramerica From United States of America, joined May 2005, 21580 posts, RR: 59
Reply 21, posted (6 years 3 weeks 6 days 23 hours ago) and read 16542 times:



Quoting PlaneInsomniac (Reply 21):
I was just trying to clarify the content of that article, which several people here have misinterpreted. I certainly do not claim to have any insight into the true state of affairs at EK.

No problem. Didn't mean to imply you were. Just pointing out that when government is intertwined heavily with business, the books are just not reliable.

Fannie Mae anyone?



Of all the things to worry about... the Wookie has no pants.
User currently offlineLightsaber From United States of America, joined Jan 2005, 13520 posts, RR: 100
Reply 22, posted (6 years 3 weeks 6 days 19 hours ago) and read 15471 times:
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Quoting PlaneInsomniac (Reply 15):
My translation: "Investment bankers are speculating that [Dubai's] neighbors could buy parts of successful enterprises such as Emirates Airlines and possibly aim at a fusion with [their own] airline Etihad."

Thank you for the explanation and translation. While I speak German, its only enough to ask for directions and 20 years ago flirt...

Quoting Ikramerica (Reply 22):
Fannie Mae anyone?

Groan. Yea... part of this problem. Certainly not as bad as Ameriquest or New Century... but Groan none the less.

Quoting Ikramerica (Reply 20):
During global economic crises, governments start to raise the protectionist flag (even if it's a bad idea).

 checkmark  It might have been what made the depression the depression... but they'll do it again. However, Dubai is an effective Wayport... so there is reason to believe it could still find its niche.

Emirates the airline is doing ok right now. But since Dubai's economy and Emirates are connected... it could be the Emirate's downfall that forces EK to adapt and not the reverse.

We'll see though. Bad economies and politics make for strange bedfellows...

Lightsaber



Societies that achieve a critical mass of ideas achieve self sustaining growth; others stagnate.
User currently offlineChiad From Norway, joined May 2006, 1185 posts, RR: 0
Reply 23, posted (6 years 3 weeks 6 days 15 hours ago) and read 14531 times:

Not that I ever believe it, but a merger would create a huge current fleet, with a gigantic backlog, and a possible future fleet of more than 460 aircraft.

Aircraft Service Orders
A319 . . . . 2
A320 . . . . 6 . . . . 27
A332 . . . . 43 . . . . 2
A333 . . . . 0 . . . . 35
A343 . . . . 9
A345 . . . 14
A346 . . . . 4 . . . 3
A359 . . . . 0 . . . 80
A3510 . . . 0 . . . .45
A388 . . . . 3 . . . .65
B772 . . . .3 . . . . 0
B772ER . . 6
B772LR . . 6 . . . . .4
B773 . . . .12
B773ER . . 41 . . . . 46
B789 . . . . 0 . . . . 35
A306RF . . 2
A332F . . . 0 . . . . . 3
MD-11F. . .1
Total . . . 152 . . . . . 345


User currently offlineRJ111 From , joined Dec 1969, posts, RR:
Reply 24, posted (6 years 3 weeks 6 days 13 hours ago) and read 13889 times:

Not a chance in hell of this happening IMO.

Just another thread for the usual bitter anti-UAE lot to come out and claim some kind of bubble has burst.


25 SWISSER : I was thinking the same, the UAE has billions of $ in reserve, I think there pretty sound of the worst things. Like a merger will "save" you...
26 Wouwout : I agree that this seems a pessimistic view on one of the world's areas that will be more and more dominant globally. The UAE actually have money, the
27 Ikramerica : It doesn't matter how much reserve you have if you are also loaded with debt and your economy is based on an exponential growth model that is no long
28 PlaneHunter : Interesting to see how fast people are with doom and gloom scenario talk...but reality will most likely disppoint those who are already jeering today.
29 Johruk : This topic has been discussed for a few days on another site...by people who work with / at Emirates... As a few of you have mentioned, it appears tha
30 UAEflyer : Abu Dhbai owns an investments firm that have more than $1.2 TRILLIONS in assets, most of world leaders visited Abu Dhabi begging their cash to be inve
31 Stitch : Because right now, most foreign projects are peanuts to them. It's why they (effectively) bought AMD last month - $1 billion for them is nothing. If
32 FlyDreamliner : Oh, my bad you're right. SO 90's. Yet they are selling out years ahead of how fast they can be built. Airbus might not sell another 55 A380s in total
33 Aerosol : Abu Dhabi has oil - Dubai has not. They will bail out Dubai if things get out of control.
34 Lightsaber : I'll agree that Dubai's building has been over the top. But only one of the three airlines is cash flow positive: EK. Lightsaber
35 Airlittoral : Fully agree. The reality is that Dubai is asking for money from Abu Dhabi in order to keep its head out of the water. They are giving part of their f
36 LifelinerOne : Well, yes. But the Gulf States are buying and investing also a lot of money in the "old" economies of the US and Europe. If they fail, a lot of big c
37 Astuteman : I suspect that by the time an airline wants to "move and A380 on", the operating customer base will be bigger than it is today.... Ah yes. The Boeing
38 PlaneInsomniac : This is wrong. They have been sold already. They cannot be un-sold. EK might cancel the deliveries, but this would undoubtedly mean they would have t
39 Travelhound : It would be interesting to see how much construction contributes to GDP. A wild guess would be around 30%. Maybe some of the banks sole reason for be
40 LH526 : LOL ... not quite
41 Post contains links Aviationbuff : No discussions over Etihad, Emirates tie-up http://www.flightglobal.com/articles...s-over-etihad-emirates-tie-up.html
42 YOWza : I believe the poster was referring to EK selling them on to another airline after taking delivery of them. YOWza
43 Ssides : Abu Dhabi no doubt has lots of money invested throughout the UAE, including Dubai, but at EK? Large, international banks like HSBC, Citibank, RBS, et
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