Description
"When Paul Astin, a British executive of a big construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines." New York Times - January 5, 2003
Welcome Aboard
Emirates Airlines
Fareeda Gafoor, Janita Kanjibhai, Jennifer Koenig, Devanshi
Patel, Sara ! "#e
“When Paul Astin, a British executive of a big
construction company here on the Persian Gulf,
travels by air, he no longer drives to the airport.
His favorite airlines, mirates Airlines, sends a car
to pic! him up, as it does "ith all its business and
#rst$class passengers in %ondon, Paris, Hong
&ong, and '( other cities. )n business class he has
a choice of *+ movie cassettes he can load "hen
he "ants, and a couple of do,en music and tal!
programs. ven in economy, passengers may
choose from '- movies and '+ video games
available on personal screens. .r. Astin dines on
meals set on pin! linen and sips #ne "ines./
0e" 1or! 2imes $ 3anuary 4, (556
Agenda
? $iddle East %egion &vervie'
?
(nited Arab Emirates
?
Political
?
Social
?
Economic
?
Airline )nd#str*
?
+om,an* &vervie'
?
Emirates Airline -al#ation
?
Project . /e' "or01 D#bai %o#te
?
+oncl#sions
?
23A
$iddle East &vervie'
?
+haracteri4ed b* co#ntries 'hose economies
are over5de,endent on oil
?
Difer on si4e, 'ealth, and ,olitical agendas
?
(AE, Sa#di Arabia and 2atar enjo* higher
GDP ,er ca,ita com,ared to other co#ntries
6)ra7, )ran, S*ria8 d#e to more ,olitical
stabilit*
(nited Arab Emirates
?
9ritish 5 :r#cial States 6;<= *rs8
?
Per,et#al :reat* of $aritime :r#ce 6;><=s8
?
Federation state formed on December ?,
;@A;
?
Seven EmiratesB Ab# Dhabi, D#bai, Ajman,
F#jairah, Sharjah, %as Al5Khaimah, and (mm
Al52ai'ain
Political Str#ct#re
? Federal S#,reme +o#rt, S#,reme +o#ncil, +abinet
of $inisters, Parliamentar* 9od*, Federal
/ational +o#ncil and an inde,endent j#diciar*
? PresidentB Shei0h Ca*ed bin S#ltan Al /#ha**an,
r#ler of Ab# Dhabi
? -ice President 3 Prime $inisterB Shei0h $a0to#m
bin %ashid Al $a0to#m, r#ler of D#bai
? /o ,olitical ,arties
? %#ling families
“It’s all in the family”
Social Str#ct#re
?
Po,#lationB D,E>=,=== ,eo,le
?
%eligionB $#slim 6@FG8
?
S,o0en ang#ageB Arabic
?
abor forceB ;!F million ,eo,le
?
A>G in services, ;<G in ind#str* and AG in
agric#lt#re
Economic Str#ct#re
? 2001 GDPB HFA!F bn or H?;,=== bn ,er ca,ita
? 70 G of government reven#e from oil ,rod#ction
? Free 4ones
? Dirham ,egged against dollar
? (neven oil distrib#tion among A emirates
?
$ar0ets
?
D#bai Financial $ar0et 6DF$8
?
Ab# Dhabi Sec#rities $ar0et 6ADS$8
= 3.67
(S 3 (AE %elations
? Established formal di,lomatic relations
since ;@AE
? GoalB sec#rit* assistance and the shared
commitment to sec#rit* and stabilit* of the
G#lf region
? in0 of ,etrole#m
? G#lf War
? Se,tember ;;
th
B (AE severed its ties to the
:aliban
+#rrent Sit#ation
?
(AE lends hel, to the (S
?
Access to its airIelds
?
President Ca*ed attem,t for ,eace in the
$iddle East
?
(rge Arab 'orld to as0 J#ssein to ste, do'n
?
:ele,hone conversation bet'een Ca*ed and 9#sh
?
Altered attit#de since (S air stri0es on )ra7
Airline )nd#str*
?
Jistor*
?
+onKictsB
?
Econom*
?
:errorism
?
War in )ra7
?
SA%S
+osts
?
abor
?
Aircraft
maintenance
?
Debt servicing
?
F#el
?
Aircraft dela*s
)nd#str* %atios
? oad Factor B
,assenger50ilometers
eL,ressed as a ,ercentage of
seat50ilometers
? %even#e Passenger
Kilometers B the n#mber of
reven#e ,assengers carried on
each Kight stage b* the Kight
stage distance
? Available Seat $iles B
the n#mber of ,assenger seats
available for sale on each Kight
stage b* the stage distance
+om,etitors
+om,an* &vervie'
?
a#nched in ;@>< to boost to#rism in D#bai
?
+#rrentl* services F= destinations in E?
co#ntries
?
Emirates strives to be 0no'n as an
international airline based in the $iddle
East rather than j#st an Arabic airline that
Kies abroad
EmiratesB Mthe Inest in the
s0*N
?
%eceived over ?==
international a'ards of
eLcellence
?
First $iddle Eastern
Airline to 'in Passenger
Service A'ard
?
&ne of the *o#ngest
Keet of aircraft in the
b#siness5 D *ears
MWhen the going gets to#gh
Emirates gets goingN
?
G#lf War
?
&nl* airline to contin#e K*ing to K#'ait
?
)ncreased n#mber of Kights b* ,ic0ing #,
com,etitorsO slac0
?
Still ,roItable des,ite o,en s0ies ,olic* at
D#bai )nternational Air,ort
Post Se,tember ;;
th
?
Posted an ;;G increase in net ,roIts in ?==;
?
)ncreased Kight service to Pa0istan and
Afghanistan
?
Anno#nced ,lan to ,#rchase <> ne' aircraft as
,art of eL,ansion strateg* 5 +ostBH;< 9illion
?
?? aircraft are Airb#s D>=5>== largest aircraft
in ,rod#ction5 to be #sed for D#bai5/e' "or0
ro#te
+#rrent Emirates Sit#ation
?
+#rrentl* increasing n#mber of Kights o#t
of D#bai, es,eciall* to So#theast Asia
?
War not reall* efecting b#siness d#e to no
direct Kight 'ith the (nited States
?
EL,ansion ro#tes ,lanned for /e' "or0, San
Francisco, Atlanta and +hicago
%atio Anal*sis
Gross Pro#t .argin +.--7
/et ProIt $argin F!<FG
8eturn on Assets 6.9-7
8eturn on :uity '4.;+7
<urrent 8atio '.++
2#ic0 %atio ;!A<
=ebt to Assets 5.-4
Debt to E7#it* ?!@<
)nterest <overage ((.(+
Financial Stat#s
?
Government5o'ned b#t does not
receive s#bsidies
?
Dh;!< billion bond iss#ance in
J#ne ?==;
?
First Emirates Airlines bond iss#e
?
argest dirham5denominated bond iss#e
?
First to be listed on D#bai Financial $ar0et
?
Private5e7#it*
1.5 Billion
Dirhams!!
%elative -al#ation
?
+om,arable Irm selection
?
9eta
?
Gro'th
?
%o#te str#ct#re
?
Si4e
?
:E- and E7#it* m#lti,le anal*sis
?
E7#it* val#e of HE!=; billion #sing E9)
A
m#lti,le
+alc#lating the WA++
?
+ost of Debt
?
(AE sovereign ris05free rateB
?!@DG
?
Altman C5Score %atingB 999P
?
After5taL cost of debtB E!?>G
? +ost of E7#it*
?
9#ilt5#, 9etaB =!>A
?
S 3 P )F+G $ar0et %et#rn
?
+ost of e7#it*B A!A@G
? WA++B <!E>G
Disco#nted +ash Flo' -al#ation
?
+ash Ko' estimation
?
$argin anal*sis
?
<5*ear ,rojection
?
E7#it* -al#eB HE!A? 9illion
?
Relative Valuation: $4.01 Billion
?
E-AB HD@!< million
%o#te EL,ansion
?
Sho#ld Emirates Airlines add a direct Kight
bet'een /e' "or0 and D#bai to its ro#te
str#ct#re in ?==EQ
Project -al#ation
?
Determining Disco#nt %ate
Adj#sted beta for added ris0 R ;!DA
?
Estimating +ash Flo's
?
$ala*sia Airlines /e'ar05D#bai reven#e ,ercentage
?
+osts based on Emirates c#rrent ro#te str#ct#re
?
)nitial &#tla* . (tili4ation ,ercentage m#lti,lied
b* cost of Airb#s AD>=5>==
Present Value of Cash Flows 19!7"9!#.$ %
&nitial &n'estment #!93#!3.56 %
(et Present Value )$!1$1!#1.$* %
D+F -al#ation
Emirates Airlines should
not begin fying to New
York in 2004
&,tion to Dela* for &ne "ear
+oncl#sions
? Emirates Airlines is a ,roItable com,an* that
consistentl* beats ind#str* standards b* em,hasi4ing
7#alit* service and ,#rs#ing strategies that a,,ear to
contradict 'hat majorit* of carriers follo'
? %o#te EL,ansion bet'een /e' "or0 and D#bai sho#ld
begin in ?==<
:han0 *o# for K*ing 'ith
Emirates AirlinesS
2#estions Q
Jis Jighness
Shei0h Ahmed bin Saeed Al5
$a0to#m,
+hairman
doc_617137083.ppt
"When Paul Astin, a British executive of a big construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines." New York Times - January 5, 2003
Welcome Aboard
Emirates Airlines
Fareeda Gafoor, Janita Kanjibhai, Jennifer Koenig, Devanshi
Patel, Sara ! "#e
“When Paul Astin, a British executive of a big
construction company here on the Persian Gulf,
travels by air, he no longer drives to the airport.
His favorite airlines, mirates Airlines, sends a car
to pic! him up, as it does "ith all its business and
#rst$class passengers in %ondon, Paris, Hong
&ong, and '( other cities. )n business class he has
a choice of *+ movie cassettes he can load "hen
he "ants, and a couple of do,en music and tal!
programs. ven in economy, passengers may
choose from '- movies and '+ video games
available on personal screens. .r. Astin dines on
meals set on pin! linen and sips #ne "ines./
0e" 1or! 2imes $ 3anuary 4, (556
Agenda
? $iddle East %egion &vervie'
?
(nited Arab Emirates
?
Political
?
Social
?
Economic
?
Airline )nd#str*
?
+om,an* &vervie'
?
Emirates Airline -al#ation
?
Project . /e' "or01 D#bai %o#te
?
+oncl#sions
?
23A
$iddle East &vervie'
?
+haracteri4ed b* co#ntries 'hose economies
are over5de,endent on oil
?
Difer on si4e, 'ealth, and ,olitical agendas
?
(AE, Sa#di Arabia and 2atar enjo* higher
GDP ,er ca,ita com,ared to other co#ntries
6)ra7, )ran, S*ria8 d#e to more ,olitical
stabilit*
(nited Arab Emirates
?
9ritish 5 :r#cial States 6;<= *rs8
?
Per,et#al :reat* of $aritime :r#ce 6;><=s8
?
Federation state formed on December ?,
;@A;
?
Seven EmiratesB Ab# Dhabi, D#bai, Ajman,
F#jairah, Sharjah, %as Al5Khaimah, and (mm
Al52ai'ain
Political Str#ct#re
? Federal S#,reme +o#rt, S#,reme +o#ncil, +abinet
of $inisters, Parliamentar* 9od*, Federal
/ational +o#ncil and an inde,endent j#diciar*
? PresidentB Shei0h Ca*ed bin S#ltan Al /#ha**an,
r#ler of Ab# Dhabi
? -ice President 3 Prime $inisterB Shei0h $a0to#m
bin %ashid Al $a0to#m, r#ler of D#bai
? /o ,olitical ,arties
? %#ling families
“It’s all in the family”
Social Str#ct#re
?
Po,#lationB D,E>=,=== ,eo,le
?
%eligionB $#slim 6@FG8
?
S,o0en ang#ageB Arabic
?
abor forceB ;!F million ,eo,le
?
A>G in services, ;<G in ind#str* and AG in
agric#lt#re
Economic Str#ct#re
? 2001 GDPB HFA!F bn or H?;,=== bn ,er ca,ita
? 70 G of government reven#e from oil ,rod#ction
? Free 4ones
? Dirham ,egged against dollar
? (neven oil distrib#tion among A emirates
?
$ar0ets
?
D#bai Financial $ar0et 6DF$8
?
Ab# Dhabi Sec#rities $ar0et 6ADS$8
= 3.67
(S 3 (AE %elations
? Established formal di,lomatic relations
since ;@AE
? GoalB sec#rit* assistance and the shared
commitment to sec#rit* and stabilit* of the
G#lf region
? in0 of ,etrole#m
? G#lf War
? Se,tember ;;
th
B (AE severed its ties to the
:aliban
+#rrent Sit#ation
?
(AE lends hel, to the (S
?
Access to its airIelds
?
President Ca*ed attem,t for ,eace in the
$iddle East
?
(rge Arab 'orld to as0 J#ssein to ste, do'n
?
:ele,hone conversation bet'een Ca*ed and 9#sh
?
Altered attit#de since (S air stri0es on )ra7
Airline )nd#str*
?
Jistor*
?
+onKictsB
?
Econom*
?
:errorism
?
War in )ra7
?
SA%S
+osts
?
abor
?
Aircraft
maintenance
?
Debt servicing
?
F#el
?
Aircraft dela*s
)nd#str* %atios
? oad Factor B
,assenger50ilometers
eL,ressed as a ,ercentage of
seat50ilometers
? %even#e Passenger
Kilometers B the n#mber of
reven#e ,assengers carried on
each Kight stage b* the Kight
stage distance
? Available Seat $iles B
the n#mber of ,assenger seats
available for sale on each Kight
stage b* the stage distance
+om,etitors
+om,an* &vervie'
?
a#nched in ;@>< to boost to#rism in D#bai
?
+#rrentl* services F= destinations in E?
co#ntries
?
Emirates strives to be 0no'n as an
international airline based in the $iddle
East rather than j#st an Arabic airline that
Kies abroad
EmiratesB Mthe Inest in the
s0*N
?
%eceived over ?==
international a'ards of
eLcellence
?
First $iddle Eastern
Airline to 'in Passenger
Service A'ard
?
&ne of the *o#ngest
Keet of aircraft in the
b#siness5 D *ears
MWhen the going gets to#gh
Emirates gets goingN
?
G#lf War
?
&nl* airline to contin#e K*ing to K#'ait
?
)ncreased n#mber of Kights b* ,ic0ing #,
com,etitorsO slac0
?
Still ,roItable des,ite o,en s0ies ,olic* at
D#bai )nternational Air,ort
Post Se,tember ;;
th
?
Posted an ;;G increase in net ,roIts in ?==;
?
)ncreased Kight service to Pa0istan and
Afghanistan
?
Anno#nced ,lan to ,#rchase <> ne' aircraft as
,art of eL,ansion strateg* 5 +ostBH;< 9illion
?
?? aircraft are Airb#s D>=5>== largest aircraft
in ,rod#ction5 to be #sed for D#bai5/e' "or0
ro#te
+#rrent Emirates Sit#ation
?
+#rrentl* increasing n#mber of Kights o#t
of D#bai, es,eciall* to So#theast Asia
?
War not reall* efecting b#siness d#e to no
direct Kight 'ith the (nited States
?
EL,ansion ro#tes ,lanned for /e' "or0, San
Francisco, Atlanta and +hicago
%atio Anal*sis
Gross Pro#t .argin +.--7
/et ProIt $argin F!<FG
8eturn on Assets 6.9-7
8eturn on :uity '4.;+7
<urrent 8atio '.++
2#ic0 %atio ;!A<
=ebt to Assets 5.-4
Debt to E7#it* ?!@<
)nterest <overage ((.(+
Financial Stat#s
?
Government5o'ned b#t does not
receive s#bsidies
?
Dh;!< billion bond iss#ance in
J#ne ?==;
?
First Emirates Airlines bond iss#e
?
argest dirham5denominated bond iss#e
?
First to be listed on D#bai Financial $ar0et
?
Private5e7#it*
1.5 Billion
Dirhams!!
%elative -al#ation
?
+om,arable Irm selection
?
9eta
?
Gro'th
?
%o#te str#ct#re
?
Si4e
?
:E- and E7#it* m#lti,le anal*sis
?
E7#it* val#e of HE!=; billion #sing E9)
A m#lti,le
+alc#lating the WA++
?
+ost of Debt
?
(AE sovereign ris05free rateB
?!@DG
?
Altman C5Score %atingB 999P
?
After5taL cost of debtB E!?>G
? +ost of E7#it*
?
9#ilt5#, 9etaB =!>A
?
S 3 P )F+G $ar0et %et#rn
?
+ost of e7#it*B A!A@G
? WA++B <!E>G
Disco#nted +ash Flo' -al#ation
?
+ash Ko' estimation
?
$argin anal*sis
?
<5*ear ,rojection
?
E7#it* -al#eB HE!A? 9illion
?
Relative Valuation: $4.01 Billion
?
E-AB HD@!< million
%o#te EL,ansion
?
Sho#ld Emirates Airlines add a direct Kight
bet'een /e' "or0 and D#bai to its ro#te
str#ct#re in ?==EQ
Project -al#ation
?
Determining Disco#nt %ate
Adj#sted beta for added ris0 R ;!DA
?
Estimating +ash Flo's
?
$ala*sia Airlines /e'ar05D#bai reven#e ,ercentage
?
+osts based on Emirates c#rrent ro#te str#ct#re
?
)nitial &#tla* . (tili4ation ,ercentage m#lti,lied
b* cost of Airb#s AD>=5>==
Present Value of Cash Flows 19!7"9!#.$ %
&nitial &n'estment #!93#!3.56 %
(et Present Value )$!1$1!#1.$* %
D+F -al#ation
Emirates Airlines should
not begin fying to New
York in 2004
&,tion to Dela* for &ne "ear
+oncl#sions
? Emirates Airlines is a ,roItable com,an* that
consistentl* beats ind#str* standards b* em,hasi4ing
7#alit* service and ,#rs#ing strategies that a,,ear to
contradict 'hat majorit* of carriers follo'
? %o#te EL,ansion bet'een /e' "or0 and D#bai sho#ld
begin in ?==<
:han0 *o# for K*ing 'ith
Emirates AirlinesS
2#estions Q
Jis Jighness
Shei0h Ahmed bin Saeed Al5
$a0to#m,
+hairman
doc_617137083.ppt