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xwb777
Topic Author
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Joined: Wed Jan 17, 2018 4:13 pm

Is it time for an Emirates IPO?

Sat Apr 11, 2020 5:33 pm

As Emirates lately has been in the news for a further cash injection from the Dubai Governemnt, is it the time that the airline will be going forward with an IPO? For the last 15 years, rumors were going around about a possible Emirates stock offering which was always denied by the airline.

Currently, the global economic climate is not in the right shape and does not allow for such a move. Will Emirates offer an IPO after the current epedemic is over and people starting to fly again?

Sheikh Ahmed Bin Saeed when asked by a journalist whether Emirates will be moving to the stock market like how Aramco has went that way he replied that the airline business is different than any other industries and its not about buying planes and flying them.

The Dubai Government hasn’t responded to Emirates request, what will be the airline’s next move to secure extra cash?

Source: https://www.arabianbusiness.com/comment ... ock-market
 
Cointrin330
Posts: 2058
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Re: Is it time for an Emirates IPO?

Sat Apr 11, 2020 5:49 pm

LOL. Definitely not now for a number of reasons, beyond how on earth EK will fill those A380s as traffic resumes, with likely many restrictions.
 
sonicruiser
Posts: 921
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Re: Is it time for an Emirates IPO?

Sat Apr 11, 2020 8:07 pm

Hopefully never.

IPO's are a great way to destroy a company
شما می توانید مردم را تحریم کنید ، اما نمی توانید سبک تحریم را اعمال کنید

You can sanction people, but you can't sanction style
 
Arion640
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Re: Is it time for an Emirates IPO?

Sat Apr 11, 2020 8:23 pm

No, they would rather not give away control of possibly the UAE’s most valuable asset.
 
Vladex
Posts: 474
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Re: Is it time for an Emirates IPO?

Sat Apr 11, 2020 8:25 pm

Cointrin330 wrote:
LOL. Definitely not now for a number of reasons, beyond how on earth EK will fill those A380s as traffic resumes, with likely many restrictions.


By having less competition for one.
 
MIflyer12
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Re: Is it time for an Emirates IPO?

Sat Apr 11, 2020 8:28 pm

sonicruiser wrote:
Hopefully never.

IPO's are a great way to destroy a company


So you think companies shouldn't be publicly traded?

Maybe the OP should be thinking private placement. https://www.investopedia.com/terms/p/pr ... cement.asp
 
jetwet1
Posts: 3242
Joined: Thu Jun 14, 2007 4:42 am

Re: Is it time for an Emirates IPO?

Sat Apr 11, 2020 9:10 pm

So the OP's thinking is that during a pandemic where international air travel has pretty much stopped, it would be a good time to do an IPO for a company that's main business is internationally connecting air travel......

The simple answer, short of someone setting off nukes in the middle East, there could not be a worse time to do an IPO for any airline.
 
whatThe
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Re: Is it time for an Emirates IPO?

Sun Apr 12, 2020 12:36 am

The short answer is that an IPO right now would not be in the interests of the owners unless there is no other way for the airline to raise money to sustain operations.

Generally speaking, potential sources of money to sustain operations include:
- Government funds, whether loan or new equity: many airlines around the world are trying this. In EK's case, the government is also the owner. If the government is short of funds, this is not an option.
- Secured borrowing: debt secured by assets (i.e. mostly planes) from a bank or investors. According to the last annual report they have about AED27bln, or $7bln, in assets that aren't specifically assigned to other debts. However, the value of those assets in the current environment is likely substantially lower than previously reported.
- Unsecured borrowing: debt not secured by assets from a bank or investors. This might be tough in the current environment without a guarantee from the government.
- Equity issuance: New equity issued to investors other than the government. As a reference point, US airline stocks are down ~60% in the last two months. That means for the airline to take this approach, it would see the current owner's (i.e. government) stake to be significantly diluted.

Typically an IPO is done in the context of existing private investors selling their shares to new public investors where the company doesn't receive any new funds. However, it is possible that a company IPOs to raise additional funds, typically to invest in growth. It's typically a last-ditch effort to do so to raise money to keep things afloat.

There are other more creative approaches, but I think the above hits the main available choices that EK has in order of preference (i.e. cost to the airline).
 
32andBelow
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Re: Is it time for an Emirates IPO?

Sun Apr 12, 2020 1:20 am

Ya the investor will say get rid of the a380s and make the flights not all go to Dubai
 
rbavfan
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Re: Is it time for an Emirates IPO?

Sun Apr 12, 2020 1:47 am

32andBelow wrote:
Ya the investor will say get rid of the a380s and make the flights not all go to Dubai


Unless they fully join the EU how could an investor tell them to not just go to Dubai. Where else would they go?
 
argentinevol98
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Re: Is it time for an Emirates IPO?

Sun Apr 12, 2020 1:49 am

I wonder if EY and EK merging ops as a UAE carrier and not Abu Dhabi or Dubai specific carriers may be a better idea than an ill-timed IPO. Some sort of deal could be worked out where-by Abu Dhabi helps inject cash into EK and EK picks up the AUH hub (and part or all of the EY fleet) and agrees to run X amount of routes out AUH in parallel to DXB or DWC and share revenue accordingly. I can't see how in a recession it makes sense for EY to exist alongside EK unless Abu Dhabi desperately wants a long-haul network out of AUH (which could be worked out). It would complicate EK ops for sure but it may just make sense. Any thoughts?

(If there is another thread already discussing this in better detail or if someone could point me to a better place to discuss this idea let me know. Thanks).
"He sospechado alguna vez que la única cosa sin misterio es la felicidad, porque se justifica por sí sola"-Jorge Luis Borges
 
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lightsaber
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Re: Is it time for an Emirates IPO?

Sun Apr 12, 2020 1:49 am

Horrible time to go public. You need a time when the public is ready to throw money at a company to IPO. The timing couldn't be worse.

Lightsaber
Winter is coming.
 
eamondzhang
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Joined: Thu Sep 23, 2010 8:23 am

Re: Is it time for an Emirates IPO?

Sun Apr 12, 2020 2:37 am

Worst time to make any IPO progress for any company at the moment - maybe sans the medical supply ones.

Vladex wrote:
Cointrin330 wrote:
LOL. Definitely not now for a number of reasons, beyond how on earth EK will fill those A380s as traffic resumes, with likely many restrictions.


By having less competition for one.

Significantly less travel demand means even less desirable for A380 ops.

Michael
 
arfbool
Posts: 99
Joined: Wed Sep 08, 2010 2:02 am

Re: Is it time for an Emirates IPO?

Sun Apr 12, 2020 3:36 am

I suppose private investment is possible, but IPO, with full public disclosure of finances, earnings forecasts, an underwriter to determine the value of the company and how to price the shares, all during an industry-wide global crisis of pandemic proportions with no clear answer to any of these questions? No, no.
 
32andBelow
Posts: 5001
Joined: Mon Sep 03, 2012 2:54 am

Re: Is it time for an Emirates IPO?

Sun Apr 12, 2020 4:05 am

rbavfan wrote:
32andBelow wrote:
Ya the investor will say get rid of the a380s and make the flights not all go to Dubai


Unless they fully join the EU how could an investor tell them to not just go to Dubai. Where else would they go?

Idk I just don’t understand why so many people want to go to 130 degree slave desert.
 
Toinou
Posts: 285
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Re: Is it time for an Emirates IPO?

Sun Apr 12, 2020 5:39 am

MIflyer12 wrote:
So you think companies shouldn't be publicly traded?


I can answer that one: hell no!

It probably one of the worse way to attract investors. I personally think that it is a mechanism that has proved to have totally nefarious effects on the economical system (but it's probably not the place to elaborate).
 
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masonite
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Re: Is it time for an Emirates IPO?

Sun Apr 12, 2020 5:41 am

This is possibly the dumbest topic I've ever seen brought up.
 
Blerg
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Joined: Tue Jan 09, 2018 11:42 am

Re: Is it time for an Emirates IPO?

Sun Apr 12, 2020 5:49 am

Haha there is a greater chance of UAE voting to join Iran or Saudi Arabia than of EK going public. They are a government tool that has acted as a catalyst in making Dubai what it is today: relevant on a global scale. Many things they did over the past several years would have never been approved by shareholders. I remember United used to be a sponsor of US Open. Then more than a decade ago EK came along and countered UA's $1 million with $11 million. US Open took it (of course) and two decades later we are still here. If EK was public this would have never happened. This is why EK needs to and will remain a government owned airline.

They have nothing to gain from going public especially with other airlines around them, their main competition, are not doing it. Very simple.
 
devron
Posts: 366
Joined: Wed Apr 20, 2011 11:56 am

Re: Is it time for an Emirates IPO?

Sun Apr 12, 2020 8:40 am

I agree with everyone: No IPO now. Unless the idea of converting a380 into IC units catches on.

I would love to go short on Emirates stock.
 
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Aesma
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Joined: Sat Nov 14, 2009 6:14 am

Re: Is it time for an Emirates IPO?

Sun Apr 12, 2020 1:36 pm

The ARAMCO IPO/disaster has probably pushed back any EK IPO for some decades.
New Technology is the name we give to stuff that doesn't work yet. Douglas Adams
 
Vladex
Posts: 474
Joined: Sat Oct 26, 2013 2:44 pm

Re: Is it time for an Emirates IPO?

Wed Apr 15, 2020 7:32 pm

eamondzhang wrote:
Worst time to make any IPO progress for any company at the moment - maybe sans the medical supply ones.

Vladex wrote:
Cointrin330 wrote:
LOL. Definitely not now for a number of reasons, beyond how on earth EK will fill those A380s as traffic resumes, with likely many restrictions.


By having less competition for one.

Significantly less travel demand means even less desirable for A380 ops.

Michael


Last year there were 4 billion passengers while this year there may be less than 1 billion and I predict that there will be 1 billion more per year after that. One needs about 2 million A380 flights to make a billion passengers. A380 is big but it's not that big.
EK is located in one airport and it's an international airline by default while all these others legacy national carriers will look to tread the water to survive and will turn insular. If I were a passenger I will look for something reliable and with a known quantity and that will be EK and a few others.
 
incitatus
Posts: 3379
Joined: Wed Feb 09, 2005 1:49 am

Re: Is it time for an Emirates IPO?

Thu Apr 16, 2020 2:38 am

Who on Earth would think this is a good idea? Not now. Not ever.

Why would the UAE want to bother with petty financial disclosure rules for Emirates? Why would they give up the ability to have cash flow across different DNATA entities by the means they choose without owing an explanation to anyone?? No, no, no!!!

Emirates is a solid airline that can make real money in good times. Western rules are just a distraction.
I do not consume Murdoch products including the Wall Street Journal
 
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FrenchPotatoEye
Posts: 355
Joined: Sun Nov 12, 2017 1:20 pm

Re: Is it time for an Emirates IPO?

Thu Apr 16, 2020 3:44 am

The article writer is nuts.

IPO in such environment where funds/access credit is harder?

What a silly suggestions. Fake news.
 
Sokes
Posts: 1808
Joined: Sat Mar 09, 2019 4:48 pm

Re: Is it time for an Emirates IPO?

Thu Apr 16, 2020 5:16 am

Toinou wrote:
MIflyer12 wrote:
So you think companies shouldn't be publicly traded?


I can answer that one: hell no!

It probably one of the worse way to attract investors. I personally think that it is a mechanism that has proved to have totally nefarious effects on the economical system (but it's probably not the place to elaborate).


When regulation is good, publicly traded companies are good.
When regulation is bad, publicly traded companies may have good or bad policies.
But it is not what it used to be twenty years back. Example:
https://www.theguardian.com/business/20 ... ry-charges
or for believers in cash flow:
https://www.forbes.com/sites/timworstal ... 7760a35daa
Why can't the world be a little bit more autistic?

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