Emirates IPO will be well received
Market boost expected as Emirates IPO likely to raise interest among investors
Dubai: An Emirates initial public offering (IPO) would be welcome news for the market, although the company does not need to raise cash by selling shares, officials said.
"Emirates has more than Dh11 billion cash flow to finance future acquisitions, so it does not need an IPO to support the expansion," a source closed to Emirates told Gulf News.
The airline, which reported a Dh3.09 billion net profits during the last financial year ending March 2007 on Dh29.83 revenues, has Dh37 billion exposure to the financial institutions while its current orderbook stands at Dh110 billion.
"We have raised Dh44.77 billion to finance fleet expansion over the last ten years. Of this, over $2.28 billion equivalent has been in the form of bonds, including a sukuk for $550 million," an Emirates spokesperson told Gulf News.
"As of the March 2007 year end, Emirates' bank borrowing stood at Dh1,071 million [of which Dh951.6 million was long term]. Total debt to equity ratio was 103 per cent."
The markets would respond positively to the IPO, officials say. "Emirates is the most successful airline in the Arab world. It would generate a lot of interest in the market," Robert Ziegler, principal at A.T. Kearney (UAE) Limited, said. "It would be well received by the financial institutions. Other regional airlines would see it positively."
Mohammad Yasin, managing director of Shuaa Capital, said, "It will be one of the most sought after IPOs and will be attractive to international institutional investors. Both DP World and Emirates are great companies to subscribe to and I think this is good for the market."
An Emirates IPO would also silence its critics who accuse it of getting subsidies. "I think it's fair to say that this move [if it were to happen] might be considered an attempt to rebut the allegations that the airline's success is the result of unfair subsidies," said Dr. Andreas Knorr, a Germany-based aviation expert.
Link: New flights launched to India and Canada
Emirates yesterday launched two new non-stop services: a six-a-week service to Ahmedabad, India, and a thrice-weekly service to Toronto, Canada - marking a simultaneous expansion of its global route network eastwards and westwards from Dubai.
