Etihad Airways sure has come a long way, as the carrier’s owners are now considering taking the airline public. This would be the first time we see something like this happen at one of the ”big three” Gulf carriers, so it could have major implications (though I should note that there have been discussion in…
Continue reading: Etihad Airways Plans IPO, First For A Major Gulf Carrier
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either the Gulf carriers are profitable and have market value or they are government subsidized.
While they heavily relied on government subsidies in the past, they are well-run businesses now.
Etihad's IPO will only accelerate the idea that the Gulf carriers do not need to be government owned, let alone subsidized.
I wonder how things would be if LH owned FRA and MUC and wasn't at war with the airport operators all the time.
Simply curious, do you know how much the big 3 gulf carriers benefit from subsidies nowadays?
that was documented at one time but I don't think it is as extensive as it once was.
The real benefit for the ME3 vs the EU and US carriers is low labor costs - the ME uses the "cruise ship" model that imports labor from lower cost countries. The role the government plays is facilitating imported labor but that is part of the Middle East and is not exclusive to airlines.
One is interested and watching intently.
Boeing stock might have to go if the offer price is competitive.
I never buy airline stocks but Lufthansa shares do look rather attractive with a single digit P/E ratio and a 5% divi.
Even the big three Chinese airlines are public despite never making a dime in the last decades or so.
@E39 there is zero proof of Gulf carriers being subsidized.
The one time the US3 did try to, they got roasted on every little claim they made.
Unfortunately if you repeat a claim long enough, people buy it.
I'd be wary of buying into this kind of IPO where a controlling share of the company is not offered to the stock market. That means the stock market brings fresh cash in but has no control of what's happening in the company and it's easy for the controlling interests to destroy the values of the stocks to buy them back after, effectively stealing the investors' capital.
This is what Disney did to build Disneyland Paris:the fiscal deal with France mandated to have 50% of public capital so Disney introduced the local company on the local stock market and then set it up to be at a perpetual loss (draining profits to the mother company through management fees, royalties, investments from mandatory subsidiaries of the mother company) for the next 30 years until the stock was worth nothing.
Disney raised about 1 billion of USD (2025 value) out of the stock market in 1989 to build their park and bought back the corresponding shares in 2017 for 46 million (2025 USD) without having paid any dividend in 2028 years. That's 900 millions of capital they extracted almost for free from the gullible stock market that thought they would get value from a company that remained fully controlled by another company wanting to make cash out of it.
And we are talking about countries (France and USA) with dependable law. Now transpose that to the Middle East and explain to me how you expect this to be in the shareholder's favour.
I think the Emirates are tired of sponsoring both carriers and the least profitable one was told to go on the stock market for its next round of funding.
Would stay away from this. If anything it says something about Etihad's state of affairs...