Emirates executives believe IPO could harm the airline

Davos: Emirates executives Maurice Flanagan and Tim Clark said the possible sale of shares in the airline might harm the company by hampering decision-making.

"We're frightened about anything that might interfere with the smooth way we are able to do business," Flanagan, the carrier's vice-chairman, said yesterday in Davos.

Top executives have told Shaikh Ahmad Bin Saeed Al Maktoum, Chairman of Dubai Civil Aviation Authority and Chief Executive of Emirates Group, of their doubts, Flanagan said.

Clark, a co-president at the airline, has said Emirates may be valued at as much as $30 billion, more than Air France-KLM Group and Deutsche Lufthansa combined.

Shaikh Ahmad said on November 13 the government may sell as much as 30 per cent of Emirates to the public.

"There aren't many good reasons for going for an IPO," Clark said yesterday, adding that Shaikh Ahmad was aware of management's views. "We certainly don't need the cash. That said, it's the shareholders' decision and if they want to go for it, we will comply and adapt accordingly."

Biggest IPO

The sale of 30 per cent of Emirates may raise $9 billion, overtaking the $4.96 billion November IPO of 23 per cent of Dubai port operator DP World as the Middle East's biggest initial offering. The emirate aims to use the Gulf's economic boom to become a global financial centre, plugging the trading gap between London and Singapore.

DP World trades on the Dubai International Financial Exchange, which has common-stock listings for nine companies since starting in 2005, according to its website. Chief executive Per Larsson said in May that the exchange needs "flagship" stocks to spur investor interest.

Emirates competes with airlines such as British Airways and Singapore Airlines linking Europe, Asia and Africa via its Dubai hub with a fleet of 113 aircraft. Emirates has another 244 planes valued at $60 billion on order.

With "unconstrained growth", the airline may need another 250 planes through 2020, although limited space at Dubai International Airport could hold back expansion, Flanagan said.

Dubai is spending $33 billion to build what it intends to be the world's largest airport at Jebel Ali. The six-runway Al Maktoum International Airport is due to be 10 times the size of Dubai's existing airport and bigger than London's Heathrow and Chicago's O'Hare airports combined when completed in 2012.