Emirates’ $18 Billion Boeing Order Kicks off Air Show

November 17, 2011 by · Leave a Comment 

By Praveen Menon and Tim Hepher

2011-11-14T075257Z_957579746_GM1E7BE186F01_RTRMADP_3_AIRSHOW-DUBAI

An Emirates Airlines Boeing 777-300 aircraft takes off during the second day of the Dubai Airshow November 14, 2011.

REUTERS/Nikhil Monteiro

DUBAI (Reuters) – Emirates airline placed a blockbuster order for 50 Boeing 777 jetliners at the Dubai Air Show on Sunday, underscoring the confidence brimming among fast-growing Gulf airlines despite growing fears of stalling global growth.

The Dubai government-owned carrier, expanding its role as the world’s largest operator of Boeing’s most profitable plane, said the deal was worth $18 billion, the largest commercial order by value in the U.S. planemaker’s history.

Reuters reported on Friday that Emirates, which has led efforts by Gulf-based carriers to challenge European and Asian carriers by establishing the region as a major East-West hub, would place an order of between 30 and 50 Boeing 777 aircraft.

“This order represents a milestone — it is the single largest dollar value (order) in the Boeing history,” Emirates Chairman Sheikh Ahmed bin Saeed al Maktoum said at a press conference, before signing the deal with Boeing representatives as Dubai’s ruler, Sheikh Mohammed bin Rashid al Maktoum, looked on.

“(The) 777 has served Emirates very well in terms of seat costs … especially when we see the fuel price is quite high.”

Fuel costs took a big toll on the airline’s first half profits, sending them down 76 percent.

Emirates said it had adequate financing in place for 2012, and planned no new bond issue. Sheikh Ahmed said the airline, which launched a heavily oversubscribed $1 billion bond in June, would consider a bond if needed and if the timing was right, adding “we don’t have a push.”

Including options to buy 20 more of the twin-aisle aircraft and other agreements, the total deal is worth $26 billion, Emirates and Boeing said.

The airline planned to eye a mix of funding options for the order, including Islamic finance, he added. Delivery of the aircraft is slated to begin in 2015.

James Albaugh, chief of Boeing’s commercial division, said the order would sustain thousands of U.S. jobs.

Boeing delivered 127 commercial airplanes in the third quarter, including 100 of its best-selling 737 narrowbodies and 21 widebody 777s. The planemaker, which gets paid for its airplanes at delivery, set its commercial airplane delivery guidance for 2011 at about 480, down from previous guidance of 485 to 495.

GULF CARRIERS SPLASH OUT

Gulf airlines and lessors are set to splash out on Airbus and Boeing jets at the November 13-17 air show, underscoring the region’s role as the industry’s chief paymaster amid Europe’s worsening sovereign debt crisis.

Qatar Airways is expected to place a $6.5-billion order for 50 fuel-saving A320neo jets and five A380s from Airbus , and Kuwait lessor Alafco plans to boost a provisional order for 30 Airbus A320neos, industry sources said.

A muted air show two years ago came days before Dubai lurched into its own property and financial crisis in 2009, but the city state has been recovering after a bailout from neighboring Abu Dhabi.
Dubai’s ruler Sheikh Mohammed spent hours at the airshow, looking at commercial and military planes and touring the floor before taking a seat at the Emirates news conference, underscoring the keen interest that the emirate has in the success of its airline and ambitions for Dubai to become a major hub.

Demand for passenger aircraft has been remarkably robust led by rising numbers of middle classes in Asia and the Middle East and a shift of economic power from the West, but some analysts fear a contagion from Europe’s spiraling debt crisis.

“Nothing goes up forever but we really believe the demand for airplanes is driven by world GDP,” Boeing Commercial Airplanes Chief Executive Jim Albaugh said on the eve of the show.

“It goes up by about one and a half times GDP, and while you have spikes .. the long-term direction is pretty positive.”

EUROFIGHTER CHALLENGE

Increasing competition to sell military hardware to Gulf states amid rising tensions over Iran’s nuclear activities also dominated the start of the show.

In a blow to France, an $11 billion contest to sell fighters to the UAE heated up on the eve of the event when the Eurofighter consortium disclosed it had been asked to present its Typhoon warplane to the country’s top military.

A spokesman for the consortium from Britain, Germany, Italy and Spain confirmed a report on the briefing in industry publication Flightglobal.com, but declined further comment.

The briefing by UK officials took place in October in response to a request from the UAE, which has held long-running talks with France over a purchase of up to 60 Dassault-built Rafale fighters.

The move injected unexpected drama into the military side of the Dubai Air Show, which will feature rival flying displays by both jets.

Dassault Aviation Chief Executive Charles Edelstenne shrugged off the assault by the Eurofighter club which France backed away from in the 1980s to concentrate on developing its own independent successor to the Mirage.

“That’s very good, I’m happy,” he told Reuters, walking briskly among displays of military U.S., European and Russian military hardware.

Asked if he was disappointed about the decision to bring in a potential new bidder, he said, “No.”

The UAE has been in talks with France since 2008 but discussions have been subjected to occasional disruption and the UAE has also enquired about the Boeing F/A18 Super Hornet.

President Nicolas Sarkozy has made it a priority to find a foreign buyer for the multi-role Rafale, billed as one of the most effective but also one of the most expensive fighter jets in the world.

Analysts say rising geopolitical tensions surrounding Iran could lead to a spike in defense orders.

(Additional reporting by Sitaraman Shankar and Nadia Saleem; Editing by Amran Abocar and Reed Stevenson)

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Dubai Now Seeking 26 Suspects in Hamas Killing

February 28, 2010 by · Leave a Comment 

By Raissa Kasolowsky and Cynthia Johnston

DUBAI (Reuters) – Dubai is hunting for at least 26 people over the killing of a Hamas commander in a Dubai hotel in a suspected Israeli operation that has caused a diplomatic furor.

Hamas military commander Mahmoud al-Mabhouh was killed last month in his hotel room in what Dubai police say they are near certain was a hit by Israel’s Mossad spy agency.

Dubai police added 15 new names on Wednesday to a list of suspects wanted over the killing. Six carried British passports, three held Irish documents, three were Australian, and three French, the Dubai government said in a statement.

Israeli media reported on Wednesday the new list could involve further cases of identity theft.

Dubai authorities had earlier named 11 suspects, who they said travelled on fraudulent British, Irish, French and German passports to kill Mabhouh. Six were Britons living in Israel who deny involvement and say their identities were stolen.

“Dubai investigators are not ruling out the possibility of involvement of other people in the murder,” the statement said.

The suspected killers’ use of passports from countries including Britain and France has drawn criticism from the European Union. Some of the governments involved have summoned their Israeli ambassadors.

“We will not be silent on this matter. It is a matter of deep concern. It really goes to the integrity and fabric of the use of state documents, which passports are, for other purposes,” Australian Prime Minister Kevin Rudd said, as his government summoned Israel’s ambassador.

The Dubai statement said: “Friendly governments (which) have been assisting in this investigation have indicated to the police in Dubai that the passports were issued in an illegal and fraudulent manner.”

It said pictures on the passports did not correspond to their original owners.

In a statement on Monday that European diplomats said was intended as a rebuke to Israel, EU foreign ministers said that the assassination was “profoundly disturbing.”

Israel has not denied or confirmed it played any role but its foreign minister said there was nothing to link it to the killing. The United States, Israel’s main ally, has kept silent about the affair.

Mabhouh, born in the Gaza Strip, had lived in Syria since 1989 and Israeli and Palestinian sources have said he played a key role in smuggling Iranian-funded arms to militants in Gaza.

A Hamas official and Israel have also said he masterminded the capture and killing of two Israeli soldiers during a Palestinian uprising in the 1980s.

Like last week, Dubai police released passport photos and closed-circuit television footage of the new suspects, who police said arrived from cities including Zurich, Paris, Rome, Milan and Hong Kong.

“This was to take the camouflage and deception to its utmost level and to guarantee the avoidance of any security supervision or observation of their movements,” the statement said.

Once their part in the operation was completed, the suspects again dispersed to different parts of the world, with two suspects leaving Dubai by boat for Iran, it said.

Dubai police also released credit card details of some of the suspects. At least 13 credit cards used to book hotel rooms and pay for air travel were issued by the same small U.S. lender, MetaBank. The bank declined comment.

“MetaBank is declining comment pending a factual review of this matter,” it said in a statement emailed to Reuters.

Israel’s Ynet news website said it had tracked down a person with the same name as one of the suspects living in Tel Aviv.

“I am in shock from what I just heard. This is an identity theft. I cannot believe it,” Adam Marcus Korman, an Australian-born Israeli, told the website.

Several other names listed as suspects by Dubai police were similar to those of people listed in the Israeli telephone directory, including two named as British passport holders. Reuters was not immediately able to contact any of those people.

Two Palestinians suspected of providing logistical support were in detention and Dubai’s police chief has said he believes the operation could not have been carried out without information from inside Hamas on Mabhouh’s travel details.

An official from the movement was quoted as saying last week that Hamas had launched an investigation to try to discover “how the Mossad was able to carry out the operation.

Mossad is believed to have stepped up covert missions against Hamas and Lebanon’s Hezbollah militia as well as Iran’s nuclear project.

Mabhouh’s killing was the third high profile murder in less than two years in trade and tourism hub Dubai, one of seven emirates in the UAE federation, where violent crime is rare.

(Additional reporting by Rania Oteify in Dubai, Allyn Fisher-Ilan and Alastair Macdonald in Jerusalem, Daniel Wilchins in New York and Rob Taylor in Canberra, Writing by Raissa Kasolowsky; Editing by Matthew Jones)

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Abu Dhabi’s Dubai aid shrinks to $5 bln

January 21, 2010 by · 1 Comment 

By Amran Abocar and Nicolas Parasie

2010-01-08T095618Z_1575008665_GM1E6181DQ601_RTRMADP_3_EMIRATES

Expert sky diver and BASE jump enthusiast Omar Al Hegelan (C) descends on to Burj Park Island after free falling from Burj Khalifa in Dubai, January 5, 2010. Al Hegelan and Nasser Al Neyadi both expert divers, have broken the record for the world’s highest BASE jump after free falling from the tallest building in the world, and made their landing on Burj Park Island after covering a vertical descent of 672 metres (2,205 ft). Picture taken January 5.

REUTERS/Stringer

DUBAI, Jan 18 (Reuters) – Dubai said on Monday that half of a $10 billion bailout from Abu Dhabi last December came from an older debt deal, highlighting what analysts said was the emirate’s poor market communications and lack of transparency.

Investors said news that Abu Dhabi directly lent less new money than previously thought also indicated the wealthy emirate wanted more evidence of Dubai’s fiscal probity, after helping it avert an embarrassing default on a state-linked bond.

“The government works behind a high degree of opacity and I think market players have factored that in,” said Khuram Maqsood, managing director of Emirates Capital.

The UAE is not known for exercising best practice transparency but that doesn’t mean they’re not trying. But I don’t think they’re there yet and I think people recognise that.”

A Dubai government spokeswoman said the last minute lifeline last Dec. 14 included $5 billion raised from Al Hilal Bank and National Bank of Abu Dhabi which was announced on Nov. 25.

“Obviously it’s a lot less cash than we had assumed,” said Raj Madha, an independent analyst based in Dubai.

“The interesting thing is what it says about the behaviour of Abu Dhabi: whether they are just rushing through a large amount of money or whether they are providing funding where required.”

Five-year credit default swaps for Dubai stood at 426 basis points, up from 423 basis points on Friday.

Dubai rocked global markets last Nov. 25 when it requested a standstill on $26 billion in debt linked to its flagship conglomerate Dubai World and its two main property developers, Nakheel and Limitless World.

The $5 billion raised from the two Abu Dhabi banks was part of a $20 billion bond programme announced early last year. The UAE central bank signed up for $10 billion of that in February.

But it was unclear whether Abu Dhabi’s $10 billion bailout on Dec. 14 — which enabled Dubai World to repay a $4.1 billion Islamic bond, or sukuk by developer Nakheel — was entirely new money or included the bond to the Abu Dhabi banks.

The government spokeswoman, who spoke on condition of anonymity, said the Gulf Arab emirate had already drawn down $1 billion of the $5 billion from the banks, provided under a five-year bond priced at 4 percent, with the rest yet to be used.

The remainder of the funds, some $4.9 billion, may come from the banks’ or the Abu Dhabi government directly, the spokeswoman said, through another of its investment vehicles.

“The question is whether there will be more funds coming in; because as things stand today, Dubai without further support will find it very difficult to drive a favourable bargain with its creditors,” said a Gulf-based banker.

Asked whether Dubai would seek more funds, the spokeswoman declined to comment.

Abu Dhabi’s support in December came nearly three weeks after the standstill news and amid a lack of communication by Dubai which shook global markets and may have caused lasting damage to the reputation of the Gulf business hub.

CREDITOR TALKS

Dubai World is in the midst of talks with its creditors to finalise a formal standstill agreement that would last for six months, during which the conglomerate will restructure its remaining debt burden, estimated at some $22 billion.

The conglomerate has insisted the restructuring is limited only to certain units and has ringfenced its jewels such as ports operator DP World.

In a research note on Monday, UBS said there was a high probability Dubai World would have to offer “sweeteners” to creditors to bring them onside in the debt talks.

That could include higher interest rates or equity swap options to persuade creditors to give up claims to key assets, like the profitable port operator.

“It is unlikely that Abu Dhabi’s support has peaked just yet and the probability of further balance sheet assistance is high,” UBS economist Reinhard Cluse said.

But he said Abu Dhabi, the biggest and wealthiest of the seven member United Arab Emirates federation, would not want to act solely “as a channel for cash” and would demand systemic changes.

Dubai has said the Abu Dhabi lifeline is contingent on Dubai World reaching an acceptable standstill with creditors.

Uncertainty over the restructuring has weighed on UAE markets as investors fret about the outcome amid a dearth of information.

The conglomerate said this month it is “some time away” from presenting its formal plan to creditors, though it is expected in coming weeks.

“Clearly there were critical time deadlines last year that required extraordinary measures,” said Mashreq Capital Chief Executive Abdul Kadir Hussain, of Abu Dhabi’s bailout.

“But whatever form is required, whether it’s the federation or Abu Dhabi, what is critical now is a well-documented plan for repayment and … a strategy that will show how all of this will be taken care of.” On Monday, the Financial Times said some creditors to the conglomerate are seeking to offload loans to reduce their exposure to the conglomerate.

(Additional reporting by Chris Mangham and Dinesh Nair; Editing by John Irish and David Cowell)

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