CAPA: Emirates unlikely to be pawn in debt restructuring
SYDNEY – Consultants Centre for Asia Pacific Aviation have largely dismissed speculation in some quarters that Emirates airline could be used as collateral by the government in Dubai as part of a deal to solve its debt problems involving Dubai World.
Says CAPA, “It has been suggested for example by one bank that, although largely independent of Dubai World, Emirates Airline may be used as collateral by its government owner.
“This is a backhanded compliment in some ways to an airline that is often accused of being government subsidised and uncommercial.â€
CAPA said that as the debt deferral/restructuring is put into context and as some more clarity emerges about what might happen as Dubai World’s mountainous debt problem is resolved, “there are several threads of interest in the aviation sector in particularâ€.
“Probably most important is firstly the role that Abu Dhabi will play in securing any debt coverage or perhaps acquisition of actual assets; and, secondly, the extent to which Dubai World may be forced to liquidate any or all of its assets as part of a promised restructuring, acceptable to its creditors.
“In the absence of any sovereign guarantee, liquidation of some assets would seem inevitable as the price of gaining creditor approval for any restructuring of the debt.
“And, what that generally means is it will essentially be preceded by an audit of every asset in which the group has an interest.
“Whatever help Dubai might seek from the federal treasury of the UAE – effectively meaning Abu Dhabi – there would almost certainly be strings attached.
“And it is likely that those too would involve the need to liquidate some of the assets, encumbered or not.â€
But CAPA says any bail out involving Emirates airline “has to be an unlikely scenarioâ€.
Earlier this week, Emirates president Tim Clark said, “Dubai will navigate itself out of this, as will we. I am confident that the airline will not be affected by this.”
Ian Jarrett
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