Emirates Getting Equity Injection From Government

Filed Under: Emirates

This ultimately doesn’t come as a surprise, but is interesting to hear nonetheless. I recently wrote about how Qatar Airways’ CEO said that the airline is running out of cash and will need state aid, and now you can add another Gulf airline to the list.

Emirates to receive injection from Dubai

Emirates’ entire fleet is grounded indefinitely, as the UAE has more or less been closed off to the outside world. Today Sheikh Hamdan bin Mohammed Al Maktoum, the Crowne Prince of Dubai, Tweeted to assure that the Government of Dubai will be providing Emirates with an equity injection soon:

Today, we renew our commitment to support a success story that started in the mid-1980s to reach its goal of sitting on the throne of global aviation. The Government of Dubai is committed to fully supporting Emirates at this critical time & will inject equity into the company.

Emirates, our national carrier, positioned Dubai as an global travel hub and has great strategic value as one of the main pillars of Dubai’s economy, as well as the wider economy of the UAE. We will announce further details about the equity injection and more measures soon.

Dubai will be providing Emirates with state aid

None of this is surprising, but…

As I said in the case of Qatar Airways as well, there’s nothing at all surprising here. Airlines around the world are getting state aid at this point, even those that are most profitable, and that a few months ago were complaining of any sort of subsidies.

Virtually all Gulf airlines are entirely government owned, and that includes Emirates. The Chairman of Emirates is Sheikh Ahmed bin Saeed Al Maktoum, and he’s also the President of the Dubai Civil Aviation Authority.

Dubai’s economy is so dependent upon Emirates, which in many ways has turned the city into a modern global hub. I don’t think there’s any question as to whether Emirates will get the support they need from the Government of Dubai, at least to the best of their ability (between low oil prices and a potentially weak global economy, let’s see how economies in the region do).

Dubai wouldn’t be where it is without Emirates

Bottom line

Emirates will be getting state aid, which is expected, since the government also entirely owns the airline.

I think what’s gong to be most interesting here is to see how the aid is structured, and if that’s publicly disclosed. We’re seeing governments provide all kinds of aid to airlines with conditions, but what does that look like when the government is also the only shareholder of the airline, and when this is ultimately really just an accounting exercise?

Comments
  1. I bet Emiratis support this. Compared to the voices I am hearing of many ordinary Americans and Europeans, where Airlines often have a poor general reputation after treating them as cash cows in the good times and now have little of the good will that still surrounds the nostalgia of old carriers such as Pan Am, Olympic and Eastern.
    Emirates and the Gulf carriers with glamor and modern terminals are the worlds modern successors to pan am rather than Greyhound bus, and the western carriers must bring back better customer service, once this virus and global crisis abates.

  2. I have said this from the very beginning of the expansion of the Middle East 3, once the economy hits the skids, they will fall like Pan Am and TWA. Will oil at $20 and likely to stay there for some time, the royalty of the Middle East will be tired of these toys and downsize them.

    I see Emirate only with 777’s cancelling other orders and grounding the A380 (which should have never been built in the first place); Qatar will also shrink and simplify it’s fleet (a320; a350 and 787) and Eithad is DOA. . .may they rest in peace.

    Fake business usually fail when times get tough and they just got tough. Look for more to fall and the big boys with strong alliances staying the course and coming back strong (except for UA which is a mess and will likely get eaten by DL or AA or maybe Breeze. . LOL)

  3. It’s worth noting that Dubai’s economy relies very little on oil at this point (somewhere in the range of 5% of GDP). It’s now much more a regional hub for trade and also gets a lot of money from tourism, which means Emirates is much more essential to the local economy than the other two Gulf carriers are to their economies. That, in turn, means it’s very likely to survive as is barring a collapse of business or tourism revenue.

  4. May be the Govt owns Emirates but the airline has been an out and out commercial enterprise making profits year after year. As far as I know, with excellent planning, the airLine has evolved as the best in the world with impeccable service and scheduling. Emirates has been and is still in the forefront which brought Immense progress and prosperity to Dubai. With not much of oil to fall back upon, the airline has been and is the driving force behind Dubai’s commerce and trade. People can rave and rant about the ownership of the airline, but if this is not the right time to inject the much needed funds, there won’t be any other time. The other airlines can just cry and cry themselves to sleep.

  5. Will this be the end of Etihad though? I know that every individual Emirate has a different government and the Abu Dhabi government could possibly inject money into Etihad but in this critical time could it really be justified to keep two airlines afloat in the UAE?

  6. @SMIYER……. are you by any chance a marketing copy writer with Emirates? or are you in their advertising/publicity department? Never have I seen such a verbal diarrhea of how fantastic Emirates Airlines is etc etc. , come from anyone . Hope you still are collecting your salary

  7. @sunviking and @StuartP: You seem to forget that a) Emirates has long been a bIg boy with a more efficient and superior operation and product than the US carriers and b) all of the US carriers used the anti-conpetitive vehicle of Chapter 11 time and time again to laden off unwanted debt and people over the years. DL, WN and Spirit are the only remotely well run carriers in the US.

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