Emirates, the Dubai's government-owned airline, is considering issuing bonds on the London stock exchange with an estimated value of at least $3.5 billion. Funds will be used to finance the purchase of the new A3XX super jumbo, as well as for other expansion plans.
Maurice Flanagan, the Emirates Group Managing Director, said "It is an idea, we are not going ahead with it, but we are considering it, … it is a possible option and a very original method of financing."
Although the company has not yet decided where to launch its initial public offering, since the UK is the biggest destination for its flights, the London market seems to be a clear favorite.
The company has up to date funded growth out of cash flow, having started the company with a $10 million investment 15 years ago.
However, Ahmed bin Saeed al-Maktoum, Emirates Chairman believes that an IPO is the right course of action to fund large scale future growth, and to penetrate the international market. He said "We believe that we should do it because the airline is fast growing. We have not done it so far because we have believed that outside shareholders might not have allowed the company to have the growth it has enjoyed. We are lucky because we just do what we think right as management. But ultimately we think it [an IPO] might happen. I do not know how soon but, yes, it would be a positive thing for the airline which has an extremely good record of profitability and an excellent reputation in terms of service."
However, Flanagan told that other options included bank loans and operating lease agreements.
Emirates has signed several bank loans to finance the purchase of A3XX passenger super-jumbos from Airbus. It signed a firm commitment in July for the five passenger versions of the new A3XX, plus two freight versions, with an option for five more aircrafts. It has already exercised three of these options to buy A330-200 aircraft valued at $350 million—bringing the total number of A330s on firm order to 21. It has also signed a letter of intent to buy six Boeing 777-300 valued at $1 billion. – (Albawaba-MEBG).
© 2000 Mena Report (www.menareport.com)
