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Faro
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EY Looking to Scrape Up USD 1.2 Billion in a Hurry to Support Bonds

Thu Feb 01, 2018 4:38 pm

Although it's not obliged to do so, Reuters has EY "scrambling" to shore up a USD 1.2 billion bond issue by an SPV it controls which was set up to benefit group companies including AB. Not an operational issue as the goal is to avert a technical default.

Funny all the same given its shareholders' historically deep and ready pockets...

Etihad could now end up spending hundreds of millions of dollars to keep the bond structure alive, although it is not legally obliged to do so as there is no cross-default provision in the bond documentation, the sources said.


https://www.reuters.com/article/us-etihad-bonds-exclusive/exclusive-etihad-scrambles-to-shore-up-1-2-billion-bonds-before-coupon-crunch-sources-idUSKBN1FL5TQ?il=0


Faro
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xwb777
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Etihad is seeking to prevent a technical default of bonds

Thu Feb 01, 2018 11:13 pm

Etihad, a national carrier of the United Arab Emirates, is currently seeking ways to prevent a technical default of bonds that the company is obliged to. In order to keep the bond structure alive, the company may have to spend Billions of dollars, although it is not obliged todo so.

Etihad spent billions of dollars on airline acquisitions that failed to deliver expected returns. The state-owned airline once owned minority stakes in eight other carriers. In 2016, the company has posted its first loss since six years and is currently restructuring again after its failed investments in some 8 airlines across the globe. At the end of 2016, Etihad has agreed to pay Alitalia's debt which is equivalent to $235m. If Etihad fails, they will end up paying alot of money.

With the restructuring plans going ahead, How will EY find and pay the debts and bonds?

Source: http://www.arabianbusiness.com/banking- ... 12bn-bonds
 
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lightsaber
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Re: Etihad is seeking to prevent a technical default of bonds

Fri Feb 02, 2018 3:18 am

How much is reputation worth? My interpretation is Etihad could walk away.

Ghad, what a huge blank check they wrote!
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vadodara
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Re: Etihad is seeking to prevent a technical default of bonds

Fri Feb 02, 2018 5:37 pm

Only question is, are they backed by the state of Abu Dhabi? If not, a default would mean the bond subscribers will end up with assets like Air Berlin and Alitalia!
 
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PerfectGriffin
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Re: Etihad is seeking to prevent a technical default of bonds

Fri Feb 02, 2018 6:22 pm

vadodara wrote:
Only question is, are they backed by the state of Abu Dhabi? If not, a default would mean the bond subscribers will end up with assets like Air Berlin and Alitalia!


Of course they are backed by the state of AD...
 
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par13del
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Re: Etihad is seeking to prevent a technical default of bonds

Fri Feb 02, 2018 6:39 pm

...were they that negligent investing in other nations airlines or just hood winked into thinking that such investments would buy them good will?
 
jetero
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Re: Etihad is seeking to prevent a technical default of bonds

Fri Feb 02, 2018 6:41 pm

par13del wrote:
...were they that negligent investing in other nations airlines or just hood winked into thinking that such investments would buy them good will?


Hoodwinked?

I’d say they were pretty dumb if they were hoodwinked into buying Darwin Airlines and Air Serbia. Even Air Berlin for that matter.
 
1900Driver
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Re: Etihad is seeking to prevent a technical default of bonds

Fri Feb 02, 2018 6:45 pm

par13del wrote:
...were they that negligent investing in other nations airlines or just hood winked into thinking that such investments would buy them good will?


Arrogant and foolish they were!
 
Arion640
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Re: Etihad is seeking to prevent a technical default of bonds

Fri Feb 02, 2018 6:52 pm

PerfectGriffin wrote:
vadodara wrote:
Only question is, are they backed by the state of Abu Dhabi? If not, a default would mean the bond subscribers will end up with assets like Air Berlin and Alitalia!


Of course they are backed by the state of AD...


They probably have more state backing than what Emirates have.

And I really don't want to sound petty here, but they're An Emirate more than a state.
 
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lightsaber
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Re: Etihad is seeking to prevent a technical default of bonds

Fri Feb 02, 2018 11:30 pm

Arion640 wrote:
PerfectGriffin wrote:
vadodara wrote:
Only question is, are they backed by the state of Abu Dhabi? If not, a default would mean the bond subscribers will end up with assets like Air Berlin and Alitalia!


Of course they are backed by the state of AD...


They probably have more state backing than what Emirates have.

And I really don't want to sound petty here, but they're An Emirate more than a state.

You really need to look at the economics of the Emirates. Dubai was always a lesser Emirate until Emirates. By the time EK was really being discussed here on a.net, Emirates was subsidizing Dubai, not the other way around.

That is why EK has always been run as a business.

EY was exciting to watch,. In my opinion subsidized by Abu Dhabi oil too much. QR isn't run well either and in my opinion subsidized.

But not EK.

Lightsaber
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Channex757
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Re: Etihad is seeking to prevent a technical default of bonds

Fri Feb 02, 2018 11:49 pm

Emirates has never been subsidised. They were started using a loan from the Dubai Government, repaid in full during year one. From then onwards the "subsidy" has been consistent yearly profits paid to the owners.

The Emir of Abu Dhabi wanted the same for his Emirate, which had one thing Dubai lacked. Oil and lots of it. Etihad was born, but by then Emirates had the pole position and the right people running the show. Throwing money at Etihad and its outlandish ideas such as the Equity Alliance was never going to work, and even as good as their product is on board they will never have the pizazz of EK's flying golden palaces.
 
TheDBCooper
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Re: Etihad is seeking to prevent a technical default of bonds

Fri Feb 02, 2018 11:49 pm

lightsaber wrote:
EY was exciting to watch,. In my opinion subsidized by Abu Dhabi oil too much. QR isn't run well either and in my opinion subsidized.r


In my humble opinion, it is a great shame since I always thought that Etihad was the most tasteful of all the ME3 airlines. What do I know, taste does not it seem equal profitability.
 
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lightsaber
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Re: Etihad is seeking to prevent a technical default of bonds

Sat Feb 03, 2018 12:27 am

TheDBCooper wrote:
lightsaber wrote:
EY was exciting to watch,. In my opinion subsidized by Abu Dhabi oil too much. QR isn't run well either and in my opinion subsidized.r


In my humble opinion, it is a great shame since I always thought that Etihad was the most tasteful of all the ME3 airlines. What do I know, taste does not it seem equal profitability.

Tasteful? Yes. It is easy to provide a superior product when no consideration has to be given to profit.

My cousin drives a great $100k car bought for $70k. He is estatic on the value. But what happens when you need cash flow n an open market? I see how that car company is cutting costs, not so with EY.

Abu Dhabi set up a system that required $100+/bbl oil to sustain. The concept had merit, not the execution. Air Berlin and Alitalia were horrible investments on a scale worthy of a case study in a text book.

Lightsaber
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eta unknown
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Re: Etihad is seeking to prevent a technical default of bonds

Sat Feb 03, 2018 1:00 am

Channex757 wrote:
Emirates has never been subsidised. They were started using a loan from the Dubai Government, repaid in full during year one. From then onwards the "subsidy" has been consistent yearly profits paid to the owners.

The Emir of Abu Dhabi wanted the same for his Emirate, which had one thing Dubai lacked. Oil and lots of it. Etihad was born, but by then Emirates had the pole position and the right people running the show. Throwing money at Etihad and its outlandish ideas such as the Equity Alliance was never going to work, and even as good as their product is on board they will never have the pizazz of EK's flying golden palaces.

To put this a bit more in perspective, for the first few years parts of the Emirates Group (read: DNATA) subsidized "Emirates Airline".
 
Sooner787
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Re: Etihad is seeking to prevent a technical default of bonds

Sat Feb 03, 2018 3:24 am

Still think Emirates will end up buying out/ merging with ETIHAD.

Of course, the combined carrier would reexamine their bulging wide body order
book and I'm sure there would be some cancellations of both Airbus and Boeing jets
 
Byrdluvs747
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Re: Etihad is seeking to prevent a technical default of bonds

Sat Feb 03, 2018 5:51 am

Sooner787 wrote:
Still think Emirates will end up buying out/ merging with ETIHAD.


It seems as if you're not the only one.

Etihad should merge with Emirates, Davy report argues

However, I wonder if some divestitures could be imposed by the DOJ/ECC in order for the the combined carrier to continue operating in the US and EU. If so, would QR be able to gain from EK/EY's loss.
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PanHAM
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Re: Etihad is seeking to prevent a technical default of bonds

Sat Feb 03, 2018 6:18 am

Amazing how histor<y repeats itself. Amazing how Management does not see the writing on the wall. This is the clear copy of the demise of Swissair in all details.
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Blerg
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Re: Etihad is seeking to prevent a technical default of bonds

Sat Feb 03, 2018 7:19 am

jetero wrote:
par13del wrote:
...were they that negligent investing in other nations airlines or just hood winked into thinking that such investments would buy them good will?


Hoodwinked?

I’d say they were pretty dumb if they were hoodwinked into buying Darwin Airlines and Air Serbia. Even Air Berlin for that matter.


Air Serbia was never a business decision, it was ordered by the Sheikh. Funny thing is that you decided to use JU as an example which is probably the only stable airline in the alliance next to Jet. Their biggest mistake was getting into Alitalia but James Hogan was arrogant and self-confident so he ignored all the alarms that went off.
 
kurtverbose
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Re: Etihad is seeking to prevent a technical default of bonds

Sat Feb 03, 2018 8:23 am

Blerg wrote:
Their biggest mistake was getting into Alitalia but James Hogan was arrogant and self-confident so he ignored all the alarms that went off.


Wikipedia says he's a businessman, but I think they forgot to put 'failed' before that title.
 
Arion640
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Re: Etihad is seeking to prevent a technical default of bonds

Sat Feb 03, 2018 8:55 am

lightsaber wrote:
Arion640 wrote:
PerfectGriffin wrote:

Of course they are backed by the state of AD...


They probably have more state backing than what Emirates have.

And I really don't want to sound petty here, but they're An Emirate more than a state.

You really need to look at the economics of the Emirates. Dubai was always a lesser Emirate until Emirates. By the time EK was really being discussed here on a.net, Emirates was subsidizing Dubai, not the other way around.

That is why EK has always been run as a business.

EY was exciting to watch,. In my opinion subsidized by Abu Dhabi oil too much. QR isn't run well either and in my opinion subsidized.

But not EK.

Lightsaber


I'm not disputing that, what I should of said was EY is getting more state backing than EK.

It's obvious EK is the more profitable of the 3, but because Emirates is not trading as a plc like in the UK for example, we're never really going to know for sure because of the way they will structure the books due to different accounting policies. I'm a huge Emirates fan, but we will never know for sure and it will always arouse suspicion they may be subsidised due to being state owned.

And I wouldn't go as far as saying EK subsidies Dubai etheir, it certainly helps but I wouldn't say it fully subsidises it.
 
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PerfectGriffin
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Re: Etihad is seeking to prevent a technical default of bonds

Sat Feb 03, 2018 2:18 pm

Arion640 wrote:
lightsaber wrote:
Arion640 wrote:

They probably have more state backing than what Emirates have.

And I really don't want to sound petty here, but they're An Emirate more than a state.

You really need to look at the economics of the Emirates. Dubai was always a lesser Emirate until Emirates. By the time EK was really being discussed here on a.net, Emirates was subsidizing Dubai, not the other way around.

That is why EK has always been run as a business.

EY was exciting to watch,. In my opinion subsidized by Abu Dhabi oil too much. QR isn't run well either and in my opinion subsidized.

But not EK.

Lightsaber


I'm not disputing that, what I should of said was EY is getting more state backing than EK.

It's obvious EK is the more profitable of the 3, but because Emirates is not trading as a plc like in the UK for example, we're never really going to know for sure because of the way they will structure the books due to different accounting policies. I'm a huge Emirates fan, but we will never know for sure and it will always arouse suspicion they may be subsidised due to being state owned.

And I wouldn't go as far as saying EK subsidies Dubai etheir, it certainly helps but I wouldn't say it fully subsidises it.


This article from EK's former President, Maurice Flanagan, is quite telling. He talks about the idea of EK potentially listing on the stock market and how that would show EK isnt subsidized.

http://www.arabianbusiness.com/emirates ... 79449.html

He also mentions that EK is valued at $40bn however given this is a three year old article, I would imagine EK is worth much more now.
 
Arion640
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Re: Etihad is seeking to prevent a technical default of bonds

Sat Feb 03, 2018 2:59 pm

PerfectGriffin wrote:
Arion640 wrote:
lightsaber wrote:
You really need to look at the economics of the Emirates. Dubai was always a lesser Emirate until Emirates. By the time EK was really being discussed here on a.net, Emirates was subsidizing Dubai, not the other way around.

That is why EK has always been run as a business.

EY was exciting to watch,. In my opinion subsidized by Abu Dhabi oil too much. QR isn't run well either and in my opinion subsidized.

But not EK.

Lightsaber


I'm not disputing that, what I should of said was EY is getting more state backing than EK.

It's obvious EK is the more profitable of the 3, but because Emirates is not trading as a plc like in the UK for example, we're never really going to know for sure because of the way they will structure the books due to different accounting policies. I'm a huge Emirates fan, but we will never know for sure and it will always arouse suspicion they may be subsidised due to being state owned.

And I wouldn't go as far as saying EK subsidies Dubai etheir, it certainly helps but I wouldn't say it fully subsidises it.


This article from EK's former President, Maurice Flanagan, is quite telling. He talks about the idea of EK potentially listing on the stock market and how that would show EK isnt subsidized.

http://www.arabianbusiness.com/emirates ... 79449.html

He also mentions that EK is valued at $40bn however given this is a three year old article, I would imagine EK is worth much more now.


Subsidies can come in more forms than just cash injections. Look at Boeing for example (probably opening a can of worms by mentioning that).
 
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PerfectGriffin
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Re: Etihad is seeking to prevent a technical default of bonds

Sat Feb 03, 2018 6:30 pm

Arion640 wrote:
PerfectGriffin wrote:
Arion640 wrote:

I'm not disputing that, what I should of said was EY is getting more state backing than EK.

It's obvious EK is the more profitable of the 3, but because Emirates is not trading as a plc like in the UK for example, we're never really going to know for sure because of the way they will structure the books due to different accounting policies. I'm a huge Emirates fan, but we will never know for sure and it will always arouse suspicion they may be subsidised due to being state owned.

And I wouldn't go as far as saying EK subsidies Dubai etheir, it certainly helps but I wouldn't say it fully subsidises it.


This article from EK's former President, Maurice Flanagan, is quite telling. He talks about the idea of EK potentially listing on the stock market and how that would show EK isnt subsidized.

http://www.arabianbusiness.com/emirates ... 79449.html

He also mentions that EK is valued at $40bn however given this is a three year old article, I would imagine EK is worth much more now.


Subsidies can come in more forms than just cash injections. Look at Boeing for example (probably opening a can of worms by mentioning that).


This is true. But with that thinking, all financial statements of all publicly listed companies with a government interest become questionable.
 
LupineChemist
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Re: Etihad is seeking to prevent a technical default of bonds

Sat Feb 03, 2018 7:32 pm

Sooner787 wrote:
Still think Emirates will end up buying out/ merging with ETIHAD.

Of course, the combined carrier would reexamine their bulging wide body order
book and I'm sure there would be some cancellations of both Airbus and Boeing jets


I think this makes a lot of sense. Especially since DWC is between Dubai and AD.

I also say they keep the Emirates brand that's much more powerful than the Etihad brand and basically just maybe keep some regional operations from DXB and AUH while combined operations just all move to DWC.
 
DWC
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Re: Etihad is seeking to prevent a technical default of bonds

Sun Feb 04, 2018 1:53 am

PerfectGriffin wrote:
Arion640 wrote:
I wouldn't go as far as saying EK subsidies Dubai etheir, it certainly helps but I wouldn't say it fully subsidises it.

This article from EK's former President, Maurice Flanagan, is quite telling. He talks about the idea of EK potentially listing on the stock market and how that would show EK isnt subsidized.
http://www.arabianbusiness.com/emirates ... 79449.html
He also mentions that EK is valued at $40bn however given this is a three year old article, I would imagine EK is worth much more now.


That article says that 3 years before that ( Jan 2015), thus in Jan 2012, EK were valued at a fourth of that or $10 billion.
We are now 3 years after this article, Feb, 2018, and if anything EK have expanded considerably with dozens of new A380s & 777s, so...

EK are run like a competitive company by Dubai laws ( no Unions, next to no taxes, etc. ). So just to put matters into perspective, last year I came across a report stating that civil aviation generated 25% of Dubai's GDP (or GNP), of which FZ & the Emirates Group are the big chunk. So EK alone must weight more to Dubai's Economy than GM ever did in the US (10% of GNP in the best years, in the 1960s...)
If that is what EY or the Abu Dhabi gov. are trying to emulate, given the rivalries between Sheiks, EY & EK are not merging anytime soon.
 
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PerfectGriffin
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Re: Etihad is seeking to prevent a technical default of bonds

Sun Feb 04, 2018 3:29 am

DWC wrote:
PerfectGriffin wrote:
Arion640 wrote:
I wouldn't go as far as saying EK subsidies Dubai etheir, it certainly helps but I wouldn't say it fully subsidises it.

This article from EK's former President, Maurice Flanagan, is quite telling. He talks about the idea of EK potentially listing on the stock market and how that would show EK isnt subsidized.
http://www.arabianbusiness.com/emirates ... 79449.html
He also mentions that EK is valued at $40bn however given this is a three year old article, I would imagine EK is worth much more now.


That article says that 3 years before that ( Jan 2015), thus in Jan 2012, EK were valued at a fourth of that or $10 billion.
We are now 3 years after this article, Feb, 2018, and if anything EK have expanded considerably with dozens of new A380s & 777s, so...

EK are run like a competitive company by Dubai laws ( no Unions, next to no taxes, etc. ). So just to put matters into perspective, last year I came across a report stating that civil aviation generated 25% of Dubai's GDP (or GNP), of which FZ & the Emirates Group are the big chunk. So EK alone must weight more to Dubai's Economy than GM ever did in the US (10% of GNP in the best years, in the 1960s...)
If that is what EY or the Abu Dhabi gov. are trying to emulate, given the rivalries between Sheiks, EY & EK are not merging anytime soon.


This is based on a report conducted by Oxford economics, commissioned by the Government of Dubai:
Dubai International is an important contributor to the Dubai economy, as it employs approximately 90,000 people, indirectly supports over 400,000 jobs and contributes over US$26.7 billion to the economy, which represents around 27 per cent of Dubai’s GDP and 21% of the employment in Dubai.It is predicted that by 2020, the economic contribution of Dubai’s aviation sector will rise to 37.5% of the city's GDP and by 2030, the economic impact of aviation is projected to grow to $88.1 billion and support 1.95 million jobs in Dubai or 44.7% of the GDP and 35.1% of the total employment.

http://content.emirates.com/downloads/e ... nal_v1.pdf
 
Cunard
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Re: Etihad is seeking to prevent a technical default of bonds

Sun Feb 04, 2018 3:38 am

LupineChemist wrote:
Sooner787 wrote:
Still think Emirates will end up buying out/ merging with ETIHAD.

Of course, the combined carrier would reexamine their bulging wide body order
book and I'm sure there would be some cancellations of both Airbus and Boeing jets


I think this makes a lot of sense. Especially since DWC is between Dubai and AD.

I also say they keep the Emirates brand that's much more powerful than the Etihad brand and basically just maybe keep some regional operations from DXB and AUH while combined operations just all move to DWC.


We can all fairly assume that in any eventual merger between Emirates and Etihad that the new combined airline would retain the name of Emirates for obvious reasons.
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EK413
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Re: Etihad is seeking to prevent a technical default of bonds

Sun Feb 04, 2018 4:45 am

TheDBCooper wrote:
lightsaber wrote:
EY was exciting to watch,. In my opinion subsidized by Abu Dhabi oil too much. QR isn't run well either and in my opinion subsidized.r


In my humble opinion, it is a great shame since I always thought that Etihad was the most tasteful of all the ME3 airlines. What do I know, taste does not it seem equal profitability.


Agreed, my impression of EK quantity & EY quality. Then JH went on a spending spree investing in carriers clearly in financial trouble opposed to focusing on their own back yard.
EK demonstrated how to take on the world all on your own.

EK413
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Blerg
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Re: Etihad is seeking to prevent a technical default of bonds

Sun Feb 04, 2018 6:49 am

EK413 wrote:
TheDBCooper wrote:
lightsaber wrote:
EY was exciting to watch,. In my opinion subsidized by Abu Dhabi oil too much. QR isn't run well either and in my opinion subsidized.r


In my humble opinion, it is a great shame since I always thought that Etihad was the most tasteful of all the ME3 airlines. What do I know, taste does not it seem equal profitability.


Agreed, my impression of EK quantity & EY quality. Then JH went on a spending spree investing in carriers clearly in financial trouble opposed to focusing on their own back yard.
EK demonstrated how to take on the world all on your own.

EK413


It wasn't just that they went around buying troubled airlines, it was also the fact that they simply didn't know how to run them. All of these previously mismanaged airlines were even more mismanaged by a legion of incompetent, scared Etihad workers. Hogan was a troubled man with major issues and complexes. Working for Etihad or any other airline where they had direct control was no walk in the park. Etihad had fundamental issues which blocked it from prospering. It's still going on.
 
Arion640
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Re: Etihad is seeking to prevent a technical default of bonds

Sun Feb 04, 2018 8:54 am

PerfectGriffin wrote:
DWC wrote:
PerfectGriffin wrote:
This article from EK's former President, Maurice Flanagan, is quite telling. He talks about the idea of EK potentially listing on the stock market and how that would show EK isnt subsidized.
http://www.arabianbusiness.com/emirates ... 79449.html
He also mentions that EK is valued at $40bn however given this is a three year old article, I would imagine EK is worth much more now.


That article says that 3 years before that ( Jan 2015), thus in Jan 2012, EK were valued at a fourth of that or $10 billion.
We are now 3 years after this article, Feb, 2018, and if anything EK have expanded considerably with dozens of new A380s & 777s, so...

EK are run like a competitive company by Dubai laws ( no Unions, next to no taxes, etc. ). So just to put matters into perspective, last year I came across a report stating that civil aviation generated 25% of Dubai's GDP (or GNP), of which FZ & the Emirates Group are the big chunk. So EK alone must weight more to Dubai's Economy than GM ever did in the US (10% of GNP in the best years, in the 1960s...)
If that is what EY or the Abu Dhabi gov. are trying to emulate, given the rivalries between Sheiks, EY & EK are not merging anytime soon.


This is based on a report conducted by Oxford economics, commissioned by the Government of Dubai:
Dubai International is an important contributor to the Dubai economy, as it employs approximately 90,000 people, indirectly supports over 400,000 jobs and contributes over US$26.7 billion to the economy, which represents around 27 per cent of Dubai’s GDP and 21% of the employment in Dubai.It is predicted that by 2020, the economic contribution of Dubai’s aviation sector will rise to 37.5% of the city's GDP and by 2030, the economic impact of aviation is projected to grow to $88.1 billion and support 1.95 million jobs in Dubai or 44.7% of the GDP and 35.1% of the total employment.

http://content.emirates.com/downloads/e ... nal_v1.pdf


So at present 27pc of Dubais GDP is provided by the airport. This is not EK like you mention subsidies Dubai, this is the airport as a whole.
 
mjoelnir
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Re: Etihad is seeking to prevent a technical default of bonds

Sun Feb 04, 2018 9:57 am

Arion640 wrote:
PerfectGriffin wrote:
DWC wrote:

That article says that 3 years before that ( Jan 2015), thus in Jan 2012, EK were valued at a fourth of that or $10 billion.
We are now 3 years after this article, Feb, 2018, and if anything EK have expanded considerably with dozens of new A380s & 777s, so...

EK are run like a competitive company by Dubai laws ( no Unions, next to no taxes, etc. ). So just to put matters into perspective, last year I came across a report stating that civil aviation generated 25% of Dubai's GDP (or GNP), of which FZ & the Emirates Group are the big chunk. So EK alone must weight more to Dubai's Economy than GM ever did in the US (10% of GNP in the best years, in the 1960s...)
If that is what EY or the Abu Dhabi gov. are trying to emulate, given the rivalries between Sheiks, EY & EK are not merging anytime soon.


This is based on a report conducted by Oxford economics, commissioned by the Government of Dubai:
Dubai International is an important contributor to the Dubai economy, as it employs approximately 90,000 people, indirectly supports over 400,000 jobs and contributes over US$26.7 billion to the economy, which represents around 27 per cent of Dubai’s GDP and 21% of the employment in Dubai.It is predicted that by 2020, the economic contribution of Dubai’s aviation sector will rise to 37.5% of the city's GDP and by 2030, the economic impact of aviation is projected to grow to $88.1 billion and support 1.95 million jobs in Dubai or 44.7% of the GDP and 35.1% of the total employment.

http://content.emirates.com/downloads/e ... nal_v1.pdf


So at present 27pc of Dubais GDP is provided by the airport. This is not EK like you mention subsidies Dubai, this is the airport as a whole.


What would that airport be without Emirates.
 
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Re: Etihad is seeking to prevent a technical default of bonds

Sun Feb 04, 2018 1:57 pm

kurtverbose wrote:
Blerg wrote:
Their biggest mistake was getting into Alitalia but James Hogan was arrogant and self-confident so he ignored all the alarms that went off.

Wikipedia says he's a businessman, but I think they forgot to put 'failed' before that title.

I do agree Alitalia was a big mistake, the whole aviation industry knew that after injecting capital twice, AF pulled out for the very same reasons EY encountered.

That said, I'd like to defend James Hogan a little on the following grounds :
1. Pulled a sizable new airline within a decade of 2003 out of nowhere
2. and what is more, in the middle of a very competitive region : EK, G9, QR, GF, SV, WY ( and FZ as of 2009 )
3. As the latest FSC in the region, EY scored nonetheless the highest growth of any airline ( with deep pockets, I know, but still no mean feat )
4. Considering none of the 3 alliances wanted to have EY with them, in face of EK & QR, the Equity alliance was an innovative idea & one that did benefit EY in terms of brand awareness & PAX increase, something like 20-25% ( admittedly, in a very expensive way )
5. Like EK & QR, EY even managed to become one of the few airlines to reach all continents ( SQ doesn't, the US3 barely )
6. Until the recent cuts after he left, EY were considered to have the best premium hard product anywhere, soft product on a par with QR & EK.
7. Personnally, I find EY's new design & livery very innovative ( EK's livery is lacklustre, QR's is good but imho below TG's, WY's )
8. Marketing wise, Etihad not only became a major player & well branded worldwide ( for a name in Arabic, not bad ),
9. as of 2014, their First Appartments & the Residence ( a class of its own between F & Concorde ) became instant references on their own.
 
blink182
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Re: Etihad is seeking to prevent a technical default of bonds

Sun Feb 04, 2018 4:48 pm

DWC wrote:
kurtverbose wrote:
Blerg wrote:
Their biggest mistake was getting into Alitalia but James Hogan was arrogant and self-confident so he ignored all the alarms that went off.

Wikipedia says he's a businessman, but I think they forgot to put 'failed' before that title.

I do agree Alitalia was a big mistake, the whole aviation industry knew that after injecting capital twice, AF pulled out for the very same reasons EY encountered.

That said, I'd like to defend James Hogan a little on the following grounds :
1. Pulled a sizable new airline within a decade of 2003 out of nowhere
2. and what is more, in the middle of a very competitive region : EK, G9, QR, GF, SV, WY ( and FZ as of 2009 )
3. As the latest FSC in the region, EY scored nonetheless the highest growth of any airline ( with deep pockets, I know, but still no mean feat )
4. Considering none of the 3 alliances wanted to have EY with them, in face of EK & QR, the Equity alliance was an innovative idea & one that did benefit EY in terms of brand awareness & PAX increase, something like 20-25% ( admittedly, in a very expensive way )
5. Like EK & QR, EY even managed to become one of the few airlines to reach all continents ( SQ doesn't, the US3 barely )
6. Until the recent cuts after he left, EY were considered to have the best premium hard product anywhere, soft product on a par with QR & EK.
7. Personnally, I find EY's new design & livery very innovative ( EK's livery is lacklustre, QR's is good but imho below TG's, WY's )
8. Marketing wise, Etihad not only became a major player & well branded worldwide ( for a name in Arabic, not bad ),
9. as of 2014, their First Appartments & the Residence ( a class of its own between F & Concorde ) became instant references on their own.


1) Yeah, but he had immense financial backing that few airlines have ever had. Credit to him where it's due for growing it into a brand.
2)See #1, but good point even if many of them, aside from Air Arabia, have had state backing.
3)I can't comment on.
4) Equity alliance has proven costly. Others, most notably Swissair, have done this and failed miserably. The pax increases could have been achieved through JVs and codesharing where applicable, but I would argue that EY Partners have been a major financial drain for EY that could have been avoided.
5)Yes--but at what cost? SQ to the best of my knowledge, is either privately held, or has minimal state support from Singapore. The US airlines are private entities and can't launch prestige routes anymore. Even EY is learning this lesson.
6) Yes, again, in comparison with EK and QR, but the reason the likes of LH, QF KL, and everyone else lack these premium hard products is because they compete in market realities and careful analyses determined a low, if negative, ROI on such an investment.
7)I grant that it is innovative, but new liveries and brands typically exist to show a real change in company strategy and to shift consumer perceptions. If anything, EY's new scheme signifies an age of cost cutting, and given how extremely slow the roll out has been, my hunch is that some analysts in AUH realized that this is a costly scheme to apply and their funds are better spent elsewhere. So now, this scheme is hardly uniform and makes even new, well maintained, planes appear old to casual observers because they don't have the new scheme. LH's new scheme, for example, may not be as revolutionary or ground breaking in design, but I'm sure LH's accountants deemed that, outside of development costs, this scheme is no more expensive to apply than the one it's replacing. If anything, While it looks cool, I think EY's new scheme has been an utter failure given how EY seems to be cutting left and right.
8) This is true, but a massive marketing budget certainly helps. They've become a global brand that luxury/lifestyle bloggers salivate over.
9) Yes, they own that category, and they've done a great job of making casual consumers believe that is on every airplane rather than just a dozen or so A380s.

Aeroflot during the USSR was the world's largest airline, but it never made any money. Of all things, I think EY's best innovations are the fixed winged headrests and the "please wake/please do not wake" eye shades, which are remarkably functional, and fun.That, and EY certainly helped drive traffic to AUH.

Bottom line, a lot of this is possible when you have an unlimited bank account. The real credit, IMO, goes to companies that haven't had a lot to work with and have had to make 1 and 1 equal 3. I get the sense that EY added 4 and 1 to get 3. I will give EY full marks once they can dig themselves out of this mess that Hogan got them into.
Give me a break, I created this username when I was a kid...
 
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Aesma
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Re: EY Looking to Scrape Up USD 1.2 Billion in a Hurry to Support Bonds

Sun Feb 04, 2018 5:11 pm

Lots of business discussion here, however we need not forget that these airlines are prestige and geopolitics tools. Confetti countries with insignificant populations want to play in the big boys league.

It will take a lot before governments abandon their airline.
New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
 
Blerg
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Re: EY Looking to Scrape Up USD 1.2 Billion in a Hurry to Support Bonds

Sun Feb 04, 2018 5:15 pm

One thing many people forget is that the Etihad equity alliance only existed so that Etihad could gain extra feed from the markets where these airlines were based in. There was almost no cooperation between other airlines. The whole system Etihad built was flawed from the start because AUH expected other governments to be as protective of their carriers as Abu Dhabi was. That's why they were so confident when they purchased Air Berlin or Alitalia. In the end it was like a group of illiterate people trying to write a novel.
 
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lightsaber
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Re: Etihad is seeking to prevent a technical default of bonds

Sun Feb 04, 2018 6:22 pm

blink182 wrote:
DWC wrote:
kurtverbose wrote:
Wikipedia says he's a businessman, but I think they forgot to put 'failed' before that title.

I do agree Alitalia was a big mistake, the whole aviation industry knew that after injecting capital twice, AF pulled out for the very same reasons EY encountered.

That said, I'd like to defend James Hogan a little on the following grounds :
1. Pulled a sizable new airline within a decade of 2003 out of nowhere
2. and what is more, in the middle of a very competitive region : EK, G9, QR, GF, SV, WY ( and FZ as of 2009 )
3. As the latest FSC in the region, EY scored nonetheless the highest growth of any airline ( with deep pockets, I know, but still no mean feat )
4. Considering none of the 3 alliances wanted to have EY with them, in face of EK & QR, the Equity alliance was an innovative idea & one that did benefit EY in terms of brand awareness & PAX increase, something like 20-25% ( admittedly, in a very expensive way )
5. Like EK & QR, EY even managed to become one of the few airlines to reach all continents ( SQ doesn't, the US3 barely )
6. Until the recent cuts after he left, EY were considered to have the best premium hard product anywhere, soft product on a par with QR & EK.
7. Personnally, I find EY's new design & livery very innovative ( EK's livery is lacklustre, QR's is good but imho below TG's, WY's )
8. Marketing wise, Etihad not only became a major player & well branded worldwide ( for a name in Arabic, not bad ),
9. as of 2014, their First Appartments & the Residence ( a class of its own between F & Concorde ) became instant references on their own.


1) Yeah, but he had immense financial backing that few airlines have ever had. Credit to him where it's due for growing it into a brand.
2)See #1, but good point even if many of them, aside from Air Arabia, have had state backing.
3)I can't comment on.
4) Equity alliance has proven costly. Others, most notably Swissair, have done this and failed miserably. The pax increases could have been achieved through JVs and codesharing where applicable, but I would argue that EY Partners have been a major financial drain for EY that could have been avoided.
5)Yes--but at what cost? SQ to the best of my knowledge, is either privately held, or has minimal state support from Singapore. The US airlines are private entities and can't launch prestige routes anymore. Even EY is learning this lesson.
6) Yes, again, in comparison with EK and QR, but the reason the likes of LH, QF KL, and everyone else lack these premium hard products is because they compete in market realities and careful analyses determined a low, if negative, ROI on such an investment.
7)I grant that it is innovative, but new liveries and brands typically exist to show a real change in company strategy and to shift consumer perceptions. If anything, EY's new scheme signifies an age of cost cutting, and given how extremely slow the roll out has been, my hunch is that some analysts in AUH realized that this is a costly scheme to apply and their funds are better spent elsewhere. So now, this scheme is hardly uniform and makes even new, well maintained, planes appear old to casual observers because they don't have the new scheme. LH's new scheme, for example, may not be as revolutionary or ground breaking in design, but I'm sure LH's accountants deemed that, outside of development costs, this scheme is no more expensive to apply than the one it's replacing. If anything, While it looks cool, I think EY's new scheme has been an utter failure given how EY seems to be cutting left and right.
8) This is true, but a massive marketing budget certainly helps. They've become a global brand that luxury/lifestyle bloggers salivate over.
9) Yes, they own that category, and they've done a great job of making casual consumers believe that is on every airplane rather than just a dozen or so A380s.

Aeroflot during the USSR was the world's largest airline, but it never made any money. Of all things, I think EY's best innovations are the fixed winged headrests and the "please wake/please do not wake" eye shades, which are remarkably functional, and fun.That, and EY certainly helped drive traffic to AUH.

Bottom line, a lot of this is possible when you have an unlimited bank account. The real credit, IMO, goes to companies that haven't had a lot to work with and have had to make 1 and 1 equal 3. I get the sense that EY added 4 and 1 to get 3. I will give EY full marks once they can dig themselves out of this mess that Hogan got them into.

1) Was EY grown sustainably? The unfortunate answer is No. So considering EY must be consolidated prior to future growth, big oops.
2) The competitive region is a possible killer for EY. You have to be #1 or #2 or you are nothing. EY, EK/FZ (I count as one), QR, TK, G9, QR, GF, SV, and WY. Now G9/FZ compete in the LCC/ULCC market (I belive Gulf aviation will have true ULCCs soon).
3) see my #1.
4) I think the alliances are warming up to EY. 9W was the one wise acquisition which changed everything. But AB, AZ, and others? It was a questionable business case day #1.
5) EY isn't reaching with profit. QR isn't either. Who has deeper pockets? Because of the HUGE amount of money destroyed in the equity alliance, EY is in trouble.
6) See my #1.
7) See my #1.
8) EY is a major brand now. Now to do something with it.
9) See my #1.


EY was neat, will the Abu Dhabi economy recover from the waste? I'm serious, will it recover? Oil is highly priced now. The US Frackers are happy, profitable, and returning equity to investors because the price is so high! So, how much growth will there be in Fracking? Eventually I hope for bio fuel (grow the fuel for export). :)

Sadly, Hogan burned through so much money the Abu Dhabi economy must be questioned on viability. Can they now pay to invest to recover their economy before production drops and others take over the energy market? Solar is a totally different market than 2005. Much to my pleasant surprise, it is a viable industry now. So is electric cars (Tesla is its own off topic discussion). Because of the energy alternatives, EY will never be as subsidized again. Should it be? Hogan tried to put Abu Dhabi on the map, but I would argue Dubai did a *much* better job of meeting Western, Indian, Chinese, and regional company needs. What will the other Emirates do if Dubai meets their own housing needs?

FWIW, Dubai is now the most populous Emirate. That helps with O&D (we can argue on how much, but Dubai leads here.)
http://worldpopulationreview.com/world- ... opulation/


So what will Etihad do? Putting it in perspective, Etihad is the #23 airline in Asia by preliminary 2017 numbers, with Emirates #6 or #7 (depending on how Lion Air did in 2017 as with emirates who doesn't tell that information until May). What we do know is that Abu Dhabi airport doesn't make the top 50 airports by passenger traffic. That kills them for economy of scale (while EK is #3, IST #14, and DOH is #50)
https://en.wikipedia.org/wiki/List_of_l ... es_in_Asia
https://en.wikipedia.org/wiki/List_of_b ... er_traffic



Lightsaber
I cannot wait to get vaccinated to live again! Warning: I simulated that it takes 50%+ vaccinated to protect the vaccinated and 75%+ vaccinated to protect the vac-hesitant.
 
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lightsaber
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Re: EY Looking to Scrape Up USD 1.2 Billion in a Hurry to Support Bonds

Sun Feb 04, 2018 6:38 pm

Aesma wrote:
Lots of business discussion here, however we need not forget that these airlines are prestige and geopolitics tools. Confetti countries with insignificant populations want to play in the big boys league.

It will take a lot before governments abandon their airline.

It won't take a long time. Where is Abu Dhabi and Qatar going to get the money to invest as they did 2005 through 2015? Will US oil production have the 'explosive growth' some predict?
"Explosive growth in the U.S. and substantial gains in Canada and Brazil will far outweigh potentially steep declines in Venezuela and Mexico."
http://www.worldoil.com/news/2018/1/19/ ... opec-fears

Wow, growth of 1.2Mbpd in the US...
https://seekingalpha.com/article/414275 ... rket-share


I did find EK carried 59 million in 2017, not such good growth, but it is growth.
https://news.gtp.gr/2018/01/31/emirates ... -services/

FWIW, slowest gulf growth in a decade, Etihad reducing 2017 capacity by 4%. What is 2018?
https://centreforaviation.com/insights/ ... ars-320180


Lightsaber
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PerfectGriffin
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Re: EY Looking to Scrape Up USD 1.2 Billion in a Hurry to Support Bonds

Sun Feb 04, 2018 6:45 pm

Hogan also failed at realizing the potential of LCC's. EK's owners figured this out once they saw how successful G9 was and launched FZ. EY instead took the opposite approach and focused becoming more luxurious and extravagant. So even with Abu Dhabi and Al Ain (AD emirates' second city, and fourth largest in the country) growing, many passengers chose to travel an extra hour to DXB/SHJ for air travel. That is serious wasted potential.
Last edited by PerfectGriffin on Sun Feb 04, 2018 6:48 pm, edited 1 time in total.
 
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PerfectGriffin
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Re: Etihad is seeking to prevent a technical default of bonds

Sun Feb 04, 2018 6:47 pm

mjoelnir wrote:
Arion640 wrote:
PerfectGriffin wrote:

This is based on a report conducted by Oxford economics, commissioned by the Government of Dubai:
Dubai International is an important contributor to the Dubai economy, as it employs approximately 90,000 people, indirectly supports over 400,000 jobs and contributes over US$26.7 billion to the economy, which represents around 27 per cent of Dubai’s GDP and 21% of the employment in Dubai.It is predicted that by 2020, the economic contribution of Dubai’s aviation sector will rise to 37.5% of the city's GDP and by 2030, the economic impact of aviation is projected to grow to $88.1 billion and support 1.95 million jobs in Dubai or 44.7% of the GDP and 35.1% of the total employment.

http://content.emirates.com/downloads/e ... nal_v1.pdf


So at present 27pc of Dubais GDP is provided by the airport. This is not EK like you mention subsidies Dubai, this is the airport as a whole.


What would that airport be without Emirates.


Apologies, I was not more clear: The report refers to the effects of aviation as a whole on Dubai, including DXB, DWC, EK and FZ.
 
mjoelnir
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Re: EY Looking to Scrape Up USD 1.2 Billion in a Hurry to Support Bonds

Sun Feb 04, 2018 9:35 pm

If we look at Dubai's aviation sector amounting to 27 % of Dubai's GDP, than take a look at DP world, over 3 billion USD revenue in the maritime sector, looking at Dubai's banking sector, than tourism, with oil and oil related income down to 5% of GDP.

Looking at the above, perhaps people understand what Dubai is living off today.
 
DWC
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Re: EY Looking to Scrape Up USD 1.2 Billion in a Hurry to Support Bonds

Sun Feb 04, 2018 11:45 pm

blink182 wrote:
Bottom line, a lot of this is possible when you have an unlimited bank account.
I will give EY full marks once they can dig themselves out of this mess that Hogan got them into.

It is not that simple : other airlines have been subsidized to similar hundreds of millions & yet stagnated over decades ( Alitalia, Aeroflot ). So Hogan shares something few CEOs have achieved ( think STC, AAB, TF, MOL ), it does take some genius few actually have.
It did help to have Abu Dhabi's deep pockets, I for one am still surprised EY achieved this much at all.
But Dubai was the whole way more ambitious & busy building landmark skyscrappers & throwing new lands on the sea on a scale no country but China has matched ( Pudong, Macau, etc. ) : that alone created O/D & tourism attractions Abu Dhabi is far from having, even Abu Dhabi's Ferrari thing or museums idea will only attract a fraction of what the Burj Khalifa does daily. Yet it did put AUH on the map, and globally, there are signs Abu Dhabi recouped its investments with EY, but that could not continue in that fashion. Dubai has fared so much better & has leap-frogged every other Emirate in the region, even the state of Qatar is no match.


Blerg wrote:
One thing many people forget is that the Etihad equity alliance only existed so that Etihad could gain extra feed from the markets where these airlines were based in. There was almost no cooperation between other airlines. The whole system Etihad built was flawed from the start because AUH expected other governments to be as protective of their carriers as Abu Dhabi was. That's why they were so confident when they purchased Air Berlin or Alitalia. In the end it was like a group of illiterate people trying to write a novel.

It may look that way now, but the move into Virgin Australia & Air Berlin was smart, it allowed growth for EY's East & West banks out of AUH.
AB was also a smart move considering how protective Germany is & should be. But AB's demise is in great part due to the delays at TXL, their whole model & investment were geared on TXL opening eons ago, not something foreseeable when EY invested in it & took their 29%.
I always considered AZ a lame duck, never understood the idea of "Etihad Regional" around the Alps, any darwinian consideration told it was bound to fail. I hear Air Serbia was doing fine but it is a small airline, peanuts really, just as Air Seychelles.
Jet Airways is perhaps EY's best joker these days, but Hogan left before he could reap the profits.


lightsaber wrote:
1) Was EY grown sustainably? The unfortunate answer is No.
2) The competitive region is a possible killer for EY. You have to be #1 or #2 or you are nothing.
4) I think the alliances are warming up to EY. 9W was the one wise acquisition which changed everything. But AB, AZ, and others? It was a questionable business case day
5) EY isn't reaching with profit. QR isn't either. Who has deeper pockets? Because of the HUGE amount of money destroyed in the equity alliance, EY is in trouble.
8) EY is a major brand now. Now to do something with it.

Sadly, Hogan burned through so much money the Abu Dhabi economy must be questioned on viability. Can they now pay to invest to recover their economy before production drops and others take over the energy market? Solar is a totally different market than 2005. Much to my pleasant surprise, it is a viable industry now. So is electric cars (Tesla is its own off topic discussion). Because of the energy alternatives, EY will never be as subsidized again. Should it be? Hogan tried to put Abu Dhabi on the map, but I would argue Dubai did a *much* better job of meeting Western, Indian, Chinese, and regional company needs. What will the other Emirates do if Dubai meets their own housing needs?

1. It is not that simple. Economics rank Airlines as "non-contestable markets", meaning huge entry & exit costs. Particularly at the scale of a FSC, when the trend to day is to launch LCCs & ULCCs. So "sustainability" is not the major issue, nor the sole, it all depends on how long & how much investors want to bleed money before reaping profits. There are special provisions in GATT & WTO agreements pertaining to "strategic sectors".
2. It is still remarkable that EY achieved no.3 in that competitive context within a decade and not too distant from QR.
4. True, specially with SkyTeam AF & KL, actually more with KL & DL as Jet Airways is bypassing AUH & flying directly to AMS to connect PAX. Also QR's entry into OneWorld has had dramatic effects in OneWorld ( QR investments in IAG, LATAM & CX, plus all the PAX transfers ), yet we have not yet heard of Skyteam considering publicly EY as a future partner.
5. No. EY did put AUH on the map & attract investment into Abu Dhabi, although at a considerable smaller rate than EK did to Dubai. Macroeconomically speaking, the money on EY was well spent, but couldn't go on like this, there are better ways to make money.
8. Exactly. Yet they are making mistakes : premium pax are complaining about perks gone & so they are looking onto EK. Other moves were needed : EY withdrawals from DFW & SFO are sound.
9. Your last point : whatever money Abu Dhabi lost in EY's Equity Alliance is small change compared to its overall economy, and as I said, globally recouped. More importantly, it was strategically sound, because contrary to the other Emirates, Abu Dhabi has oil aplenty & has way more desert land than all other emirates combined to expand. The problem for Abu Dhabi is succeeding its economic transition, going from a oil-based economy to one of services, where aviation is the jewel in the crown. Abu Dhabi will not export solar energy, everyone around has enough Sun, roofs & desert surfaces to do that, so Abu Dhabi has to do something similar & yet different than Dubai ( which have succeeded remarkably well, from a smaller base & not without financial problems ).

As it stands, I think Abu Dhabi will continue supporting EY because it is crucial to their development in the future ( same with Qatar & QR, gaz reserves are even bigger ).
To me, EY are an economic oddity in the grand scheme of things, an EK-EY merger makes sense on the surface. However, because of that exclusive geographic position to connect the world, and what is more in an ever growing aviation market, there is actually economic room for 3 or more players. One also forgets that thanks to the Gulf Wars, the UAE rose to become the new financial center of the whole Middle-East & will remain so for a long time.
On a sidenote, everyone speaks of TK ( which is a hefty 3h hours away as the jet flies ), but no one is paying attention to IR or SV, which have much much larger populations & could very well be key players within a decade or two.
 
tullamarine
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Re: EY Looking to Scrape Up USD 1.2 Billion in a Hurry to Support Bonds

Mon Feb 05, 2018 4:24 am

It all depends how desperate EY are. For example, SQ may be interested in EY's stake in VA which is worth at least $500M but potentially more given it would attract a control premium. Of course, if acquired in a single tranche, SQ would have to make a general takeover offer to all shareholders in VAH which could potentially cost them over $1.5B which may be too much for them at the moment.
717, 721/2, 732/3/4/5/7/8/9, 742/3/4, 752/3, 762/3, 772/E/W, 788/9, 300,310, 319,320/1, 332/3, 359, 388, DC9, DC10, F28, F100, 142,143, E75/90, CR2, D82/3/4, SF3, ATR
 
by738
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Re: EY Looking to Scrape Up USD 1.2 Billion in a Hurry to Support Bonds

Mon Feb 05, 2018 6:40 pm

I still cant get a feel whether this is something serious or something and nothing.
 
vadodara
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Re: EY Looking to Scrape Up USD 1.2 Billion in a Hurry to Support Bonds

Mon Feb 05, 2018 7:51 pm

PerfectGriffin wrote:
Hogan also failed at realizing the potential of LCC's. EK's owners figured this out once they saw how successful G9 was and launched FZ. EY instead took the opposite approach and focused becoming more luxurious and extravagant. So even with Abu Dhabi and Al Ain (AD emirates' second city, and fourth largest in the country) growing, many passengers chose to travel an extra hour to DXB/SHJ for air travel. That is serious wasted potential.


Actually, if EY becomes a boutique airline with a limited network offering a superior service, it will have found a niche. Abu Dhabi is flowing in money c.w. Dubai.

At some point, Hogan lost his bearings. Otherwise, EY was a great idea to enhance Abu Dhabi as a location.

Obviously, both Air Berlin and Alitalia were disastrous. Even their investments in Jet Airways were rather mismanaged eventhough financially they came out ahead.

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