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dfwking
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Emirates seeking loans on top of government bailout

Mon Apr 06, 2020 11:39 am

Emirates is in talks to secure additional funding on top of the bailout given by the Dubai government. While the other two ME3 carriers are supported by governments with deep pockets, Dubai's government is not as deep pocketed and looks to be unable to support Emirates fully.

https://finance.yahoo.com/news/emirates-airline-seeks-billions-loans-155348789.html

Since the Covid-19 pandemic is moving at different speeds in each country / continent, international long-haul travel could take longer to recover than domestic or short-haul international travel. In this environment, carriers like Emirates are going to need help for a longer period of time than American, European, or East Asian carriers.

Is it feasible for Emirates to secure such loans from private sources for a long period of time? Do they own they own aircraft to be put up as collateral? And what happens if they are not able to secure the loans and face a cash crunch?
 
MIflyer12
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Re: Emirates seeking loans on top of government bailout

Mon Apr 06, 2020 12:04 pm

Look for their ability to borrow on commercial markets as some fraction of their unencumbered assets - after you've deleted any value attributed to A380s for which there is obviously no market. Start with the most recent annual report.
 
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lightsaber
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Re: Emirates seeking loans on top of government bailout

Mon Apr 06, 2020 1:52 pm

Emirates will have to put everything up for collateral. Belt loaders, Air Stairs, fuel trucks, spare parts, aircraft, and anything else of value to ship outside of the UAE.

With how many countries are printing money, there is plenty to lend. The question is terms.

Dubai is subsidized by Emirates, this will be brutal for the city state. Abu Dhabi is over committed, so I have little/no home for Etihad. Qatar will be a loss leader...

With the new IST airport and growth of Ethiopian, EK has more competition. They will continue, but their years as the boogyman are over. This means tougher funding.

Lightsaber
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mmo
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Re: Emirates seeking loans on top of government bailout

Mon Apr 06, 2020 4:26 pm

The last time this happened they took a little drive up the road to AUH and got there with their hands out. In fact, the deal was supposed to include an equity stake. However, that was turned down by AUH and EK was provided a loan instead. I would expect the same thing to happen again. There is no way the UAE will allow EK to be placed in any type of jeopardy, just like they would not allow EY to fold.
If we weren't all crazy we'd all go insane!
 
hohd
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Re: Emirates seeking loans on top of government bailout

Mon Apr 06, 2020 4:36 pm

Correct, may be Dubai may not have enough money to loan/grant to EK, but there is no way that UAE will allow EK to get into any further trouble. When EK prospers the entire country prospers.
 
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FLALEFTY
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Re: Emirates seeking loans on top of government bailout

Mon Apr 06, 2020 4:49 pm

MIflyer12 wrote:
Look for their ability to borrow on commercial markets as some fraction of their unencumbered assets - after you've deleted any value attributed to A380s for which there is obviously no market. Start with the most recent annual report.


I think I read that Emirates is asking Airbus to defer the last 8 A388's left on their order until they are back on their feet after the crisis. I imagine they are also talking to Boeing to defer initial deliveries of the B779's due next year. While they have "firm orders" for A359's and B789's, I imagine first deliveries of those will be deferred, or even canceled, too.
 
TObound
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Re: Emirates seeking loans on top of government bailout

Mon Apr 06, 2020 4:51 pm

EK bankrolls Dubai. Despite everyone thinking it's the other way around, EK is a profit centre for the Government of Dubai. And more importantly an economic enabler and multiplier that brings tourists, investors and commerce through the city. Dubai will never be in a position to substantially bail out EK because any hit to EK means a simultaneous and amplified hit to Dubai Inc.

There's an obvious way out.

1) Merge EY and EK.
2) Centralize at DWC.
3) Build rail transit to Dubai and Abu Dhabi.
4) Close DXB and use the freed up real estate for other purposes.

Now let's see if the Al-Maktoums can swallow their pride and save their emirate.
 
Vladex
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Re: Emirates seeking loans on top of government bailout

Mon Apr 06, 2020 4:54 pm

It must be for expansion , maybe to restart A380 production. EK hasn't really lost money and is losing minimal amounts now, in fact they restarted some flights.
 
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Revelation
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Re: Emirates seeking loans on top of government bailout

Mon Apr 06, 2020 5:30 pm

TObound wrote:
EK bankrolls Dubai. Despite everyone thinking it's the other way around, EK is a profit centre for the Government of Dubai. And more importantly an economic enabler and multiplier that brings tourists, investors and commerce through the city. Dubai will never be in a position to substantially bail out EK because any hit to EK means a simultaneous and amplified hit to Dubai Inc.

There's an obvious way out.

1) Merge EY and EK.
2) Centralize at DWC.
3) Build rail transit to Dubai and Abu Dhabi.
4) Close DXB and use the freed up real estate for other purposes.

Now let's see if the Al-Maktoums can swallow their pride and save their emirate.

It's kind of interesting that your path to redemption involves having the emirs swallow their pride, meanwhile those emirs took money away from building out DWC to fund Dubai Expo 2020 said to cost $33B USD / 121B AED ( ref: https://lovindubai.com/expo-2020/expo-p ... l-cost/amp ) which was all about building up their pride.

It's interesting how this site has so many proposals that make sense logically but are totally opposite of the actions of the people making the decisions.
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CALMSP
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Re: Emirates seeking loans on top of government bailout

Mon Apr 06, 2020 5:47 pm

Vladex wrote:
It must be for expansion , maybe to restart A380 production. EK hasn't really lost money and is losing minimal amounts now, in fact they restarted some flights.


define minimal amounts. There is no way that EK is different from other airlines that are losing millions every day.
 
Scotron12
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Re: Emirates seeking loans on top of government bailout

Mon Apr 06, 2020 6:00 pm

FLALEFTY wrote:
MIflyer12 wrote:
Look for their ability to borrow on commercial markets as some fraction of their unencumbered assets - after you've deleted any value attributed to A380s for which there is obviously no market. Start with the most recent annual report.


I think I read that Emirates is asking Airbus to defer the last 8 A388's left on their order until they are back on their feet after the crisis. I imagine they are also talking to Boeing to defer initial deliveries of the B779's due next year. While they have "firm orders" for A359's and B789's, I imagine first deliveries of those will be deferred, or even canceled, too.


Seeing as right now all production is shut down in Washington State, difficult to guess when/if the first B779 gets delivered to any airline. Maybe in 6-9 months the picture will be a bit clearer, but right now, I don't see any B779 deliveries next year.
 
xwb777
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Re: Emirates seeking loans on top of government bailout

Mon Apr 06, 2020 6:43 pm

Just my personal opinion, if EK really needs the loan for their operations, I think the UAE government will help EK from falling, as the falling of Emirates is not good for the UAE's image. Dubai government might also want to bailout Flydubai.
 
Vladex
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Re: Emirates seeking loans on top of government bailout

Mon Apr 06, 2020 6:56 pm

CALMSP wrote:
Vladex wrote:
It must be for expansion , maybe to restart A380 production. EK hasn't really lost money and is losing minimal amounts now, in fact they restarted some flights.


define minimal amounts. There is no way that EK is different from other airlines that are losing millions every day.


It's widely known that among others Etihad , Qatar and Cathay in the last year have lost lots of money. On the other hand US3 will be losing lots of money because of their 10 hubs each slow shutdown and very painful restart. EK is obviously different and they were flying almost normally and then had instant shutdown. Also their brand is way above others and the few passengers will be looking for something reliable when they do restart.
 
Western727
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Re: Emirates seeking loans on top of government bailout

Mon Apr 06, 2020 8:20 pm

TObound wrote:
EK bankrolls Dubai. Despite everyone thinking it's the other way around, EK is a profit centre for the Government of Dubai. And more importantly an economic enabler and multiplier that brings tourists, investors and commerce through the city. Dubai will never be in a position to substantially bail out EK because any hit to EK means a simultaneous and amplified hit to Dubai Inc.

There's an obvious way out.

1) Merge EY and EK.
2) Centralize at DWC.
3) Build rail transit to Dubai and Abu Dhabi.
4) Close DXB and use the freed up real estate for other purposes.

Now let's see if the Al-Maktoums can swallow their pride and save their emirate.


With you on the above, except for #2, though I don't necessarily disagree; rather, I seek clarification for I've not been to the country yet (was supposed to be there 2 weeks ago to visit my expat sister and her family, but that obviously got postponed...to the last week of November). I've seen photos of DXB's terminals and they appear to have been well-built. Why do you propose "tossing" DXB in favor of DWC? My initial thought is that DXB is better located relative to Dubai itself, so I look forward to your (and others') insight.
Jack @ AUS
 
CALMSP
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Re: Emirates seeking loans on top of government bailout

Mon Apr 06, 2020 9:44 pm

Western727 wrote:
TObound wrote:
EK bankrolls Dubai. Despite everyone thinking it's the other way around, EK is a profit centre for the Government of Dubai. And more importantly an economic enabler and multiplier that brings tourists, investors and commerce through the city. Dubai will never be in a position to substantially bail out EK because any hit to EK means a simultaneous and amplified hit to Dubai Inc.

There's an obvious way out.

1) Merge EY and EK.
2) Centralize at DWC.
3) Build rail transit to Dubai and Abu Dhabi.
4) Close DXB and use the freed up real estate for other purposes.

Now let's see if the Al-Maktoums can swallow their pride and save their emirate.


With you on the above, except for #2, though I don't necessarily disagree; rather, I seek clarification for I've not been to the country yet (was supposed to be there 2 weeks ago to visit my expat sister and her family, but that obviously got postponed...to the last week of November). I've seen photos of DXB's terminals and they appear to have been well-built. Why do you propose "tossing" DXB in favor of DWC? My initial thought is that DXB is better located relative to Dubai itself, so I look forward to your (and others') insight.


for me, it just seems so non-fluid. Would like DWC to be "THE" airport, with much better seating, more of an airport built for a massive connecting hub. as for the proximity to Dubai, so long as the metro rail connects DWC, it works for me.
 
Airlines0613
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Re: Emirates seeking loans on top of government bailout

Mon Apr 06, 2020 10:03 pm

Vladex wrote:
CALMSP wrote:
Vladex wrote:
It must be for expansion , maybe to restart A380 production. EK hasn't really lost money and is losing minimal amounts now, in fact they restarted some flights.


define minimal amounts. There is no way that EK is different from other airlines that are losing millions every day.


It's widely known that among others Etihad , Qatar and Cathay in the last year have lost lots of money. On the other hand US3 will be losing lots of money because of their 10 hubs each slow shutdown and very painful restart. EK is obviously different and they were flying almost normally and then had instant shutdown. Also their brand is way above others and the few passengers will be looking for something reliable when they do restart.

Holds no valid point to explain that EK is still profitable or barely losing money. I highly doubt its still profitable, since international travel is the hardest hit at the moment. EK is completely international, meaning they are at a greater risk than other airlines. If I recall correctly, EK was barely making a profit the quarter before COVID-19 really hit. Everything, including the bailout and loans, points to EK bleeding a lot of money at the moment.
 
dtw2hyd
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Re: Emirates seeking loans on top of government bailout

Mon Apr 06, 2020 10:37 pm

Vladex wrote:
CALMSP wrote:
Vladex wrote:
It must be for expansion , maybe to restart A380 production. EK hasn't really lost money and is losing minimal amounts now, in fact they restarted some flights.


define minimal amounts. There is no way that EK is different from other airlines that are losing millions every day.


It's widely known that among others Etihad , Qatar and Cathay in the last year have lost lots of money. On the other hand US3 will be losing lots of money because of their 10 hubs each slow shutdown and very painful restart. EK is obviously different and they were flying almost normally and then had instant shutdown. Also their brand is way above others and the few passengers will be looking for something reliable when they do restart.


Really, US Carriers had the most capacity discipline in the world to a point it could be called capacity restriction with highest margins. Even United had a decent margin last year. Southwest operates on higher margins than Emirates.

Domestic markets will rebound first followed by international.

US domestic is world's largest aviation market, with less capacity going forward, US carriers can command higher fares with lower level of service, hence higher margins.

What will EK do with its mostly leased fleet. Sure they can fire most of the 100k workforce, but they have to pay monthly leases or return planes and pay penalty.

Upthread Lightsaber said, EK should be putting their Ground Handling equipment and even aircraft parts as collateral. How much of it does EK own. EK Engineering may have $10 Billion worth of parts in the warehouse owned by someone else. EK's "lets not own anything" model is coming back to bite.

All City State Sixth Freedom carriers will have tough time going forward. It is up to their governments to bailout or say goodbye.
All posts are just opinions.
 
Scotron12
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Re: Emirates seeking loans on top of government bailout

Tue Apr 07, 2020 12:31 am

Dubai government will do what's required to keep EK going. And rightly so. They are too integral to Dubai for them to go under.
 
KingB123
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Re: Emirates seeking loans on top of government bailout

Tue Apr 07, 2020 4:10 am

I wonder what if the expo gets cancelled. Thats a nail in Dubai and Emirates coffins
King B
 
Toinou
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Re: Emirates seeking loans on top of government bailout

Tue Apr 07, 2020 6:07 am

KingB123 wrote:
I wonder what if the expo gets cancelled. Thats a nail in Dubai and Emirates coffins


At the moment, it is not cancelled, it is postponed.

I'm wondering on a few aspects on which I would like to have your opinions:
1) Probably it would make sense for EK to reduce massively its workforce at the moment so to reduce costs. I guess that local laws are pretty open-minded about that kind of option. The aspect on which I'm wondering is that, if I remember correctly, they had difficulties to keep their staff, especially pilots. So, if they let them go, can that hinder the rebound?

2) Some people talked about the option of EK being helped/taken over by UAE government and I have to say that it may make sense to me as EK is a very important tool to the entire country. But, to what extant is there such a thing as a UAE? I was under the impression that UAE was more a confederation than a federation: the central government seems to have very little power (and money) except maybe for defence purpose and that most of the rest is handled at emirate level. Am I right?
 
directorguy
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Re: Emirates seeking loans on top of government bailout

Tue Apr 07, 2020 6:18 am

Western727 wrote:
TObound wrote:
EK bankrolls Dubai. Despite everyone thinking it's the other way around, EK is a profit centre for the Government of Dubai. And more importantly an economic enabler and multiplier that brings tourists, investors and commerce through the city. Dubai will never be in a position to substantially bail out EK because any hit to EK means a simultaneous and amplified hit to Dubai Inc.

There's an obvious way out.

1) Merge EY and EK.
2) Centralize at DWC.
3) Build rail transit to Dubai and Abu Dhabi.
4) Close DXB and use the freed up real estate for other purposes.

Now let's see if the Al-Maktoums can swallow their pride and save their emirate.


With you on the above, except for #2, though I don't necessarily disagree; rather, I seek clarification for I've not been to the country yet (was supposed to be there 2 weeks ago to visit my expat sister and her family, but that obviously got postponed...to the last week of November). I've seen photos of DXB's terminals and they appear to have been well-built. Why do you propose "tossing" DXB in favor of DWC? My initial thought is that DXB is better located relative to Dubai itself, so I look forward to your (and others') insight.


The conventional wisdom is that DWC, due to its proximity to "New Dubai" (where a lot of the flashy real estate developments are being built) and the emirate of Abu Dhabi, is in an ideal location to serve as a gateway to both cities (and by default the rest of the UAE as well). DWC would be purpose built and optimal as a transfer hub and would have room to grow, whereas DXB is right in the middle of Dubai and is bound by major highways.
One solution would have been shut down DXB and move everything to DWC. A rail link could then be built between DWC and Deira (where DXB is located), though it would have to be better than the regular Dubai Metro. The site of the old DXB would be worth billions not to mention the adjacent areas (currently warehouses, low rise buildings etc).
Before COVID-19, EK was experiencing several problems. Pleateaued growth, restrictive bilaterals, rejuvenated national airlines in other countries, newer plane designs, changing airline economics, all began to negate the need for DWC. They ended up postponing the expansion of DWC more or less indefinitely. With the current COVID-19 crisis, I see Dubai collapsing, and DWC being nothing more than a hub for EK SkyCargo.
 
Prost
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Re: Emirates seeking loans on top of government bailout

Tue Apr 07, 2020 6:25 am

I think the economic fallout is going to be brutal on middle class tourism. If Dubai and EK cater to that demographic I can see tough times for them as well as every other airline.
 
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enzo011
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Re: Emirates seeking loans on top of government bailout

Tue Apr 07, 2020 8:34 am

Toinou wrote:
2) Some people talked about the option of EK being helped/taken over by UAE government and I have to say that it may make sense to me as EK is a very important tool to the entire country. But, to what extant is there such a thing as a UAE? I was under the impression that UAE was more a confederation than a federation: the central government seems to have very little power (and money) except maybe for defence purpose and that most of the rest is handled at emirate level. Am I right?


I am not sure exactly the power arrangements of the UAE government, but what is in the interest of Dubai may not be in the interest of Abu Dhabi. So I don't see how the UAE government is able to influence much as the interests of the rulers will not always be aligned.

A guess as good as any I would think is that if EK is suffering financially and needs financial help it is Etihad that survives as the name of the UAE airline. I mean they got them to change the name of one vanity project, why not the others that needs bailing out as well?
 
mmo
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Re: Emirates seeking loans on top of government bailout

Tue Apr 07, 2020 12:42 pm

enzo011 wrote:

I am not sure exactly the power arrangements of the UAE government, but what is in the interest of Dubai may not be in the interest of Abu Dhabi. So I don't see how the UAE government is able to influence much as the interests of the rulers will not always be aligned.

A guess as good as any I would think is that if EK is suffering financially and needs financial help it is Etihad that survives as the name of the UAE airline. I mean they got them to change the name of one vanity project, why not the others that needs bailing out as well?


The Emir of Abu Dhabi is also the President of the UAE, the Emir of Dubai is the Vice President of the UAE. Most of the money is in Abu Dhabi. Dubai relies more on tourism and banking, while Abu Dhabi relies on those to a much lesser extent. Abu Dhabi has the gas and that is where the majority of the money comes from. During the downturn in the Gulf, Emirates needed cash which Dubai couldn't give. There was an approach to Abu Dhabi and part of the offer was to take an equity position in Emirates. That went no place. A loan was given to Emirates. In reality, the government and the Emirs couldn't let Emirates fail. And as long as there is enough money to go around Emirates will stay alive financially. EY can't become Emirates overnight which would have to happen and Egos being what they are, EK and EY would never do an out and out merger.
If we weren't all crazy we'd all go insane!
 
Toinou
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Re: Emirates seeking loans on top of government bailout

Tue Apr 07, 2020 1:13 pm

Thanks, you're confirming what was my impression. There couldn't be an intervention on that topic by the federation but maybe Abu Dhabi (and maybe other emirates) could.
I guess it could even be the occasion for another ego-flattering renaming like already happened with some projects in Dubai. (Which may be a bad commercial move in my opinion as Emirates is a well established brand but it is clearly not the only aspect playing now.)
 
goosebayguy
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Re: Emirates seeking loans on top of government bailout

Tue Apr 07, 2020 5:07 pm

Dubai airport and EK are 85% of the Dubai economy. Quite a staggering figure.
 
Western727
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Re: Emirates seeking loans on top of government bailout

Tue Apr 07, 2020 5:37 pm

goosebayguy wrote:
Dubai airport and EK are 85% of the Dubai economy. Quite a staggering figure.


I've found myself wondering what has (or will) become of the gold-dispensing ATMs in Dubai, as well as the many other displays of lavishness...and Expo 2020, which is supposed to happen in the fall season (November, I believe).

We rescheduled our 13-22 March trip to DXB...to 20-29 November because of the pandemic (interestingly, the 22 March EK211 flight from DXB to IAH was *the* last one before EK shut down), so I truly hope my family of 4 will be able to make the November trip to visit my expat sister and her family, who live in Ruwais City, about 3 hours WSW of Dubai and 2 hours WSW of Abu Dhabi.
Jack @ AUS
 
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Revelation
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Re: Emirates seeking loans on top of government bailout

Tue Apr 07, 2020 6:45 pm

mmo wrote:
In reality, the government and the Emirs couldn't let Emirates fail. And as long as there is enough money to go around Emirates will stay alive financially. EY can't become Emirates overnight which would have to happen and Egos being what they are, EK and EY would never do an out and out merger.

How much money does it take to keep lease payments on 115 A380 and 142 777 going when next to none are flying? Seems like a lot. Then when recovery happens how much money do you lose on each flight since these planes have so many seats to fill yet many pax will not be flying because they will have burned through a lot of their savings to get through the crisis? And at the same time you start to have to spend money to retrain everyone for A350 and 787 coming in, buy sims and spares, etc. Meanwhile all that Dubai Expo spending ($33B or so) will not be providing yields. Seems a giant rethink will be needed.

It's a strange time. So much about EK and Dubai was about massive growth. It worked for a long time, but now circumstances are different and they have significant exposure. There's more to life than fair weather sailing.
Wake up to find out that you are the eyes of the world
The heart has its beaches, its homeland and thoughts of its own
Wake now, discover that you are the song that the morning brings
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mxaxai
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Re: Emirates seeking loans on top of government bailout

Tue Apr 07, 2020 7:08 pm

Revelation wrote:
How much money does it take to keep lease payments on 115 A380 and 142 777 going when next to none are flying? Seems like a lot.

Emirates Group reported costs for debt service, including lease payments, of about US$ 5.7 billion in FY 2018-19. Probably the same can be expected for FY 2019-20.

That's US$ 15 million per day. Compare Delta burning cash four times as fast, currently. (https://www.businessinsider.com/delta-c ... ?r=DE&IR=T)

https://www.emirates.com/english/about- ... l-reports/
 
xwb777
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Re: Emirates seeking loans on top of government bailout

Tue Apr 07, 2020 7:57 pm

Revelation wrote:
mmo wrote:
In reality, the government and the Emirs couldn't let Emirates fail. And as long as there is enough money to go around Emirates will stay alive financially. EY can't become Emirates overnight which would have to happen and Egos being what they are, EK and EY would never do an out and out merger.

How much money does it take to keep lease payments on 115 A380 and 142 777 going when next to none are flying? Seems like a lot. Then when recovery happens how much money do you lose on each flight since these planes have so many seats to fill yet many pax will not be flying because they will have burned through a lot of their savings to get through the crisis? And at the same time you start to have to spend money to retrain everyone for A350 and 787 coming in, buy sims and spares, etc. Meanwhile all that Dubai Expo spending ($33B or so) will not be providing yields. Seems a giant rethink will be needed.

It's a strange time. So much about EK and Dubai was about massive growth. It worked for a long time, but now circumstances are different and they have significant exposure. There's more to life than fair weather sailing.


I think in regards for training pilots for the upcoming A350s and B787s, I think the airline might train its pilots at Etihad. Just my opinion :)
 
Scotron12
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Re: Emirates seeking loans on top of government bailout

Tue Apr 07, 2020 9:15 pm

xwb777 wrote:
Revelation wrote:
mmo wrote:
In reality, the government and the Emirs couldn't let Emirates fail. And as long as there is enough money to go around Emirates will stay alive financially. EY can't become Emirates overnight which would have to happen and Egos being what they are, EK and EY would never do an out and out merger.

How much money does it take to keep lease payments on 115 A380 and 142 777 going when next to none are flying? Seems like a lot. Then when recovery happens how much money do you lose on each flight since these planes have so many seats to fill yet many pax will not be flying because they will have burned through a lot of their savings to get through the crisis? And at the same time you start to have to spend money to retrain everyone for A350 and 787 coming in, buy sims and spares, etc. Meanwhile all that Dubai Expo spending ($33B or so) will not be providing yields. Seems a giant rethink will be needed.

It's a strange time. So much about EK and Dubai was about massive growth. It worked for a long time, but now circumstances are different and they have significant exposure. There's more to life than fair weather sailing.


I think in regards for training pilots for the upcoming A350s and B787s, I think the airline might train its pilots at Etihad. Just my opinion :)


How much training is required to go from B777 to B787...and an A380 to an A350? However, Im sure there are many pilots right now available already experienced in both types.
 
Toinou
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Re: Emirates seeking loans on top of government bailout

Wed Apr 08, 2020 7:22 am

goosebayguy wrote:
Dubai airport and EK are 85% of the Dubai economy. Quite a staggering figure.


Could you provide an explanation about that figure?
Directly, transport is at about 12% (source: https://www.ft.com/content/4d169d0c-4be ... 9067e0f50d). I'm aware that they are many side effects to bringing large number of people but 85% seems like every aspect of the economy that is even remotely linked to foreign countries is attributed to EK.
 
Insertnamehere
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Re: Emirates seeking loans on top of government bailout

Wed Apr 08, 2020 7:25 am

Dubai wouldn't be the huge city it is today without EK as it has artificially created Dubai into an international destination. The Emirate of Dubai and the entire UAE will bankroll just about anything to ensure the airline can stay afloat.
 
worldranger
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Re: Emirates seeking loans on top of government bailout

Wed Apr 08, 2020 9:01 am

It’s a perfect storm in Dubai.

Some of the big hitters, EMAAR, DAMAC, Jumeirah Hotel Group & of course EK - amongst many others, are bleeding heavily.

White elephants aplenty; The World Islands, DWC, Palm Jebel Ali & Deira, QE2. yada yada...ego decisions that ignored common sense.

That said no Emirates - no Dubai.

They have two options - Abu Dhabi or the International marketplace (cue China)

They will have to keep it local - merge already & move to DWC. High speed rail to both cities, downtown check in etc.

Will it happen? Well if they haven’t learned from the elephants above - no hope.
 
Jomar777
Posts: 554
Joined: Tue Oct 20, 2015 8:45 am

Re: Emirates seeking loans on top of government bailout

Wed Apr 08, 2020 9:11 am

TObound wrote:
EK bankrolls Dubai. Despite everyone thinking it's the other way around, EK is a profit centre for the Government of Dubai. And more importantly an economic enabler and multiplier that brings tourists, investors and commerce through the city. Dubai will never be in a position to substantially bail out EK because any hit to EK means a simultaneous and amplified hit to Dubai Inc.

There's an obvious way out.

1) Merge EY and EK.
2) Centralize at DWC.
3) Build rail transit to Dubai and Abu Dhabi.
4) Close DXB and use the freed up real estate for other purposes.

Now let's see if the Al-Maktoums can swallow their pride and save their emirate.


Your ideas are the only solution for the UAE - one single Flagship Carrier.

But given the Arabic Culture overall, only when the Al-Maktoums find a good... let's say... excuse, they will not do it.

Same as the blockade on GCC - this is over and well past overdue but it does not ends because nobody wants to take the bitter (humble...) pill...
 
Toinou
Posts: 260
Joined: Sun Apr 14, 2019 8:21 am

Re: Emirates seeking loans on top of government bailout

Wed Apr 08, 2020 9:54 am

Insertnamehere wrote:
Dubai wouldn't be the huge city it is today without EK as it has artificially created Dubai into an international destination. The Emirate of Dubai and the entire UAE will bankroll just about anything to ensure the airline can stay afloat.

I mostly agree. But in all fairness, while EK probably was a huge part of what bring Dubai where it is now, a good part of the start (and still a good source of revenue for many years) was with another kind of transport: Jebel Ali port (and the associate industries) that acted as a logistical hub for the whole region, including some discreet transactions helped by not cautious authorities (which allowed, for example, many transactions with Iran). And this part is not going the right side either: there is much more concurrence than before (Oman, Qatar...) and Dubai is not as neutral as it used to be (because of the influence of Abu Dhabi, itself because of Saudi Arabia) which means which makes it less useful for some kind of business that were not an insignificant part of what was done there.
 
TObound
Posts: 776
Joined: Mon May 27, 2019 12:54 am

Re: Emirates seeking loans on top of government bailout

Wed Apr 08, 2020 11:53 am

Jomar777 wrote:
TObound wrote:
EK bankrolls Dubai. Despite everyone thinking it's the other way around, EK is a profit centre for the Government of Dubai. And more importantly an economic enabler and multiplier that brings tourists, investors and commerce through the city. Dubai will never be in a position to substantially bail out EK because any hit to EK means a simultaneous and amplified hit to Dubai Inc.

There's an obvious way out.

1) Merge EY and EK.
2) Centralize at DWC.
3) Build rail transit to Dubai and Abu Dhabi.
4) Close DXB and use the freed up real estate for other purposes.

Now let's see if the Al-Maktoums can swallow their pride and save their emirate.


Your ideas are the only solution for the UAE - one single Flagship Carrier.

But given the Arabic Culture overall, only when the Al-Maktoums find a good... let's say... excuse, they will not do it.

Same as the blockade on GCC - this is over and well past overdue but it does not ends because nobody wants to take the bitter (humble...) pill...


I see it happening. The longer the Covid 19 crisis goes on, the worse it is for EK. And let's be clear, the Al-Maktoums can't afford to bail out EK and every other Dubai Inc. conglomerate. And bailouts will be needed. The Covid 19 crisis is going to be hitting aviation and tourism long after North America and Europe return to work. So every day that passes this gets closer to an existential crisis for Dubai.

The sooner the Al-Maktoums cut a deal with the Al-Nahyans, the better the deal they will get. Also, centralizing at DWC is the only way to free up all that real estate at DXB to help them get rich again.

Oh. And let's not forget that there are non-Gulf threats waiting in the wings. From, the new IST and TK to the new Mumbai airport and increasingly direct flights bypassing the Gulf. They can come out stronger or weaker from the crisis.
 
TObound
Posts: 776
Joined: Mon May 27, 2019 12:54 am

Re: Emirates seeking loans on top of government bailout

Wed Apr 08, 2020 12:15 pm

Revelation wrote:
TObound wrote:
EK bankrolls Dubai. Despite everyone thinking it's the other way around, EK is a profit centre for the Government of Dubai. And more importantly an economic enabler and multiplier that brings tourists, investors and commerce through the city. Dubai will never be in a position to substantially bail out EK because any hit to EK means a simultaneous and amplified hit to Dubai Inc.

There's an obvious way out.

1) Merge EY and EK.
2) Centralize at DWC.
3) Build rail transit to Dubai and Abu Dhabi.
4) Close DXB and use the freed up real estate for other purposes.

Now let's see if the Al-Maktoums can swallow their pride and save their emirate.

It's kind of interesting that your path to redemption involves having the emirs swallow their pride, meanwhile those emirs took money away from building out DWC to fund Dubai Expo 2020 said to cost $33B USD / 121B AED ( ref: https://lovindubai.com/expo-2020/expo-p ... l-cost/amp ) which was all about building up their pride.

It's interesting how this site has so many proposals that make sense logically but are totally opposite of the actions of the people making the decisions.


Pre-Covid the decision would not have been entirely insensible. Business was booming. Their strategy of promoting Dubai was working. And they had to stay ahead of the (other Gulf states) pack. Post-Covid, the party is over. They don't have any other real options. A year from now, how many destinations will they really be able to serve. And what subset of those will be profitable with such massive aircraft? And given how much more damaging this will be to the developing world, it will be a long time before many of their Asia and Africa destinations rebound entirely.

Also, the Al-Nahyans are more incentivized to cooperate than scalp as they have in the past. They just got a glimpse of what the end of the oil era could look like. Being smug isn't going to serve them well here. Their long term survival depends very much on the success of Dubai.
 
Toinou
Posts: 260
Joined: Sun Apr 14, 2019 8:21 am

Re: Emirates seeking loans on top of government bailout

Wed Apr 08, 2020 2:39 pm

TObound wrote:
The sooner the Al-Maktoums cut a deal with the Al-Nahyans, the better the deal they will get. Also, centralizing at DWC is the only way to free up all that real estate at DXB to help them get rich again.

I'm not sure this would really be a smart move: real estate was already in trouble before that crisis in Dubai with way too much offer for a very sleek demand. It was already a classical case of construction-led growth that can't stop itself when it's working for nothing. There was something that had to crash and it was set to be nasty, with this situation, it may get catastrophic.
 
TObound
Posts: 776
Joined: Mon May 27, 2019 12:54 am

Re: Emirates seeking loans on top of government bailout

Wed Apr 08, 2020 3:33 pm

Toinou wrote:
TObound wrote:
The sooner the Al-Maktoums cut a deal with the Al-Nahyans, the better the deal they will get. Also, centralizing at DWC is the only way to free up all that real estate at DXB to help them get rich again.

I'm not sure this would really be a smart move: real estate was already in trouble before that crisis in Dubai with way too much offer for a very sleek demand. It was already a classical case of construction-led growth that can't stop itself when it's working for nothing. There was something that had to crash and it was set to be nasty, with this situation, it may get catastrophic.


I'm not referring to selling the real estate per se. DXB is a massive chunk of land right in the middle of the city. They could build a whole financial or industrial district there.

The location made sense decades ago when it was far out of town. Today? Not so much. And that is what creates an opportunity for a mutually beneficial deal of sorts. The Al-Nahyans save EK and DWC and turn them into truly national assets. The Al-Maktoums free up a ton of real estate that they can develop, which avoids them and their emirate from going broke.
 
CALMSP
Posts: 3187
Joined: Wed Aug 13, 2003 3:18 am

Re: Emirates seeking loans on top of government bailout

Wed Apr 08, 2020 4:23 pm

EK has announced all cargo ops at DXB for the interim.
 
Toinou
Posts: 260
Joined: Sun Apr 14, 2019 8:21 am

Re: Emirates seeking loans on top of government bailout

Wed Apr 08, 2020 4:30 pm

TObound wrote:
Toinou wrote:
TObound wrote:
The sooner the Al-Maktoums cut a deal with the Al-Nahyans, the better the deal they will get. Also, centralizing at DWC is the only way to free up all that real estate at DXB to help them get rich again.

I'm not sure this would really be a smart move: real estate was already in trouble before that crisis in Dubai with way too much offer for a very sleek demand. It was already a classical case of construction-led growth that can't stop itself when it's working for nothing. There was something that had to crash and it was set to be nasty, with this situation, it may get catastrophic.


I'm not referring to selling the real estate per se. DXB is a massive chunk of land right in the middle of the city. They could build a whole financial or industrial district there.

The location made sense decades ago when it was far out of town. Today? Not so much. And that is what creates an opportunity for a mutually beneficial deal of sorts. The Al-Nahyans save EK and DWC and turn them into truly national assets. The Al-Maktoums free up a ton of real estate that they can develop, which avoids them and their emirate from going broke.


I still don't get how you can make money out of development, even in a very well placed place, if you are in a situation of huge (and probably lasting) economical downturn and if your market is already over-developped. It could be an opportunity for a long-term very optimistic bet but I'm not sure that even the Al-Nahyans are ready for that.
 
User avatar
Revelation
Posts: 23954
Joined: Wed Feb 09, 2005 9:37 pm

Re: Emirates seeking loans on top of government bailout

Wed Apr 08, 2020 5:10 pm

TObound wrote:
Pre-Covid the decision would not have been entirely insensible. Business was booming. Their strategy of promoting Dubai was working. And they had to stay ahead of the (other Gulf states) pack. Post-Covid, the party is over. They don't have any other real options. A year from now, how many destinations will they really be able to serve. And what subset of those will be profitable with such massive aircraft? And given how much more damaging this will be to the developing world, it will be a long time before many of their Asia and Africa destinations rebound entirely.

Also, the Al-Nahyans are more incentivized to cooperate than scalp as they have in the past. They just got a glimpse of what the end of the oil era could look like. Being smug isn't going to serve them well here. Their long term survival depends very much on the success of Dubai.

The tide was already turning pre-covid. EK was seeing declining load factors and feeling regional and international competition. STC's grandiose A380 fleet plan came to a grinding halt, A359 and 789 were ordered. STC's successor was named. DWC funding was halted while money was redirected towards Dubai Expo presumably because good PR was needed. Real estate was in over supply.

This "DWC as regional airport" thing has been kicked around a lot here, but I have yet to hear any of the principals (i.e. the Emirs) mention it. It seems to be a creation of bloggers and social media mavens. It would involve a MASSIVE amount of spending to build out the airport and add necessary ground transportation links, and as above DWC funding had already been shut down in favor of glamour projects such as Dubai Expo. I thought someone here did an estimate of what it would cost to deliver the needed high speed rail links to the city centers and it made the eyes water. I have a hard time seeing one Emir help the other Emir get a bigger airport than their own and end up depending on that Emir to keep vital air service available. I just don't see the appetite for so much spending on a pure infrastructure project.
Wake up to find out that you are the eyes of the world
The heart has its beaches, its homeland and thoughts of its own
Wake now, discover that you are the song that the morning brings
The heart has its seasons, its evenings and songs of its own
 
Jomar777
Posts: 554
Joined: Tue Oct 20, 2015 8:45 am

Re: Emirates seeking loans on top of government bailout

Wed Apr 08, 2020 8:10 pm

TObound wrote:
Jomar777 wrote:
TObound wrote:
EK bankrolls Dubai. Despite everyone thinking it's the other way around, EK is a profit centre for the Government of Dubai. And more importantly an economic enabler and multiplier that brings tourists, investors and commerce through the city. Dubai will never be in a position to substantially bail out EK because any hit to EK means a simultaneous and amplified hit to Dubai Inc.

There's an obvious way out.

1) Merge EY and EK.
2) Centralize at DWC.
3) Build rail transit to Dubai and Abu Dhabi.
4) Close DXB and use the freed up real estate for other purposes.

Now let's see if the Al-Maktoums can swallow their pride and save their emirate.


Your ideas are the only solution for the UAE - one single Flagship Carrier.

But given the Arabic Culture overall, only when the Al-Maktoums find a good... let's say... excuse, they will not do it.

Same as the blockade on GCC - this is over and well past overdue but it does not ends because nobody wants to take the bitter (humble...) pill...


I see it happening. The longer the Covid 19 crisis goes on, the worse it is for EK. And let's be clear, the Al-Maktoums can't afford to bail out EK and every other Dubai Inc. conglomerate. And bailouts will be needed. The Covid 19 crisis is going to be hitting aviation and tourism long after North America and Europe return to work. So every day that passes this gets closer to an existential crisis for Dubai.

The sooner the Al-Maktoums cut a deal with the Al-Nahyans, the better the deal they will get. Also, centralizing at DWC is the only way to free up all that real estate at DXB to help them get rich again.

Oh. And let's not forget that there are non-Gulf threats waiting in the wings. From, the new IST and TK to the new Mumbai airport and increasingly direct flights bypassing the Gulf. They can come out stronger or weaker from the crisis.


I am not sure actually. Do not rule out but wonder why it has not happened before... With the blockade, the amount of flights which were shelved by both EK and EY was significant. Those are rich countries (UAE, KSA, Kuwait, Oman and Qatar...) but the Qataris are the ones that like to splash cash and Dubai (most of all...) miss them (their cash, that is...).

Now, with COVID19, with the need to actually make DWC work (it is ready but I simply do not understand why they have not at least moved some EK flights there...), with EY really in a bad way...

To bail EK out now, it will be to admit that the company is really struggling. I believe that something with a headline as "Major Consolidation", "Air Optimization", etc etc will be needed as well as a full review of their orders (EK and EY) with both Boeing and Airbus implying on a reduction of their assets... hat's a lot for them to take

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