Best of 2012: Maurice Flanagan interview

Sir Maurice Flanagan has helped grow Emirates Airline into one of the world’s successful companies. In a wide ranging interview, he looks back at the challenges he faced, and what the future holds
Best of 2012: Maurice Flanagan interview
By Shane McGinley
Sun 13 May 2012 10:50 AM

When Sir Maurice Flanagan looks back at his career, there will be many “what if I’d done that” scenarios. He could have had a career as professional footballer in England, but for a knee injury. The National Theatre invited him to write for them after he won a television playwriting competition. And after 25 years service with the company, he may well have ended up running British Airways.

Several people, including HH Sheikh Mohammed Bin Rashid Al Maktoum, will be glad he pursued none of the above. Over the past 27 years, Sir Maurice has been one of the most important figures in the growth of Emirates Airline, and as vice chairman, has long been the trusted right-hand man to chairman HH Sheikh Ahmed Bin Saeed Al Maktoum.

You want experience? You want expertise? You want unrivalled success? Look no further than Sir Maurice, who even his rivals would describe as a “living legend” of the industry.

“I was given $10m by Sheikh Mohammed in 1985 and told don’t come back for any more or subsidy of any kind or protection of any kind. About $81m they put in, the shell of the training college, but that’s all,” he recalls.

“There was an imperative as we knew we couldn’t go back if we lost money... We had to make money, so we had to be economical and the business model was very efficient.”

Twenty seven years on, and the figures speak for themselves: Emirates has over 170 aircraft, and flies to more than 120 destinations in over 70 countries. Flanagan is probably one of the few people who can still remember that morning in October 1985, when Emirates flew its first routes out of Dubai with just two planes — a leased Boeing 737 and Airbus 300B4.

When setting up Emirates, Flanagan says one of the most difficult things to change was the attitude to the chain of command and tradition of having a bulging executive class. “How many people were reporting to managers? No deputy managers or any of that sort of thing... That was one of the hardest things I had when I was setting up the airline.”

He says “the basic principle is still there” today and that is why he believes Emirates has not needed any government subsidies and it is why it is different from its competitors across the world. “We are just a better run airline,” he explains.

On the issue of regional dominance, Flanagan is happy to let Qatar Airways and Etihad fight over the second place spot as he is adamant there is only one clear dominant player in the Middle East: Dubai and Emirates.

“Our [setup] is quite different from both of them. Akbar (Al Baker, CEO of Qatar Airways) doesn’t deny that they are subsidised. We are not,” he says proudly.

Flanagan’s mantra has always been that while most other airlines around the world are dependent on government coffers to survive, Emirates instead is a massive money generator for Dubai.

Emirates has delivered billions of dollars to the Dubai government exchequer in the form of dividends over the decades, but has Flanagan ever thought the unthinkable and wondered whether it was time to sell the airline in order to dig the emirate out of its mountain of debt.

“I wouldn’t like to see it happen,” Flanagan says, adding: “I don’t think it is being seriously thought of, but the time might come when it would make sense to do that.” When asked who potential buyers would be, he says “it would depend on which markets it is opened to.”

Though Flanagan does later add that these are purely his “personal” opinions, explaining: “Obviously any decision to sell a stake in Emirates is the sole decision of our shareholder, the Government of Dubai. There is no requirement to sell any stake in the airline. Emirates’ financial fundamentals are solid; we continue to fund our own expansion through various local and international financing options.”

Were that day ever to come, Saj Ahmad, chief analyst at StrategicAero Research, says such a sale would generate a lot of interest and could result in a payday of up to $11bn for Emirates’ owners.

“At a guess, Emirates would be valued somewhere between $9bn — $11bn at today’s prices, based largely on its wide body dominated fleet and its burgeoning net cash assets that amount to over $4bn,” Ahmad says.

“Selling even a fraction of it would reel in a significant windfall, but given the economic uncertainty in capital markets, it’s not that clear that any IPO will happen during this decade.

“Clearly, many banks, large institutional investors and hedge funds would line up round the block to own a slice of Emirates — but they are in for a long and painful wait. Emirates’ asset value is probably the strongest of any airline in the world and is now more sought after than at any time since the carrier started operations in 1985.”

While profit for the six months to 30 September 2011, fell 76 percent to AED827m ($225m), as rising fuel costs and regional unrest squeezed margins, revenue was up fifteen percent to AED30bn ($8.1bn).

Despite Dubai’s debt problems, Flanagan says Emirates has never had any issues arranging financing and has always received a favourable response from banks.

“We have never had any trouble getting finance or getting a bond oversubscribed. Six times that last one was oversubscribed, which shows what the market thinks of us,” he says.

At last year’s Dubai Air Show, Emirates recorded the single largest aircraft order in dollar-value for Boeing when it signed on the dotted line for $18bn worth of 777 jets. In addition, it is one of the largest clients for Airbus’ A380 superjumbo, with 90 of the iconic aircraft. While it has to find the routes to operate to fill these new aircraft, Flanagan says the airline will always pursue a solo path and it has no urge to follow Etihad’s direction and enter into alliances or buy up stakes in smaller carriers.

“We would never dream of it,” he says when asked if he saw Emirates ever joining any aviation alliances, such as Oneworld or Star Alliance. “You have to compromise too many things, including the IT system to confirm with theirs and that is the nervous system of the business... You just wouldn’t do that.”

While he does not rule out codesharing arrangements, such as its linkup with US carrier JetBlue, Flanagan says Emirates’ acquisition of a stake in Sri Lankan Airlines was a pretty negative experience and not one he thinks it should be in a rush to repeat.

“Absolutely not… It eats up an enormous amount of senior management time. They want you to develop that airline to be like Emirates... To do that, you have to base staff there and have senior managers going to and fro… It’s just not worth it,” he says.

With alliances and acquisitions ruled out, getting access to more landing rights is the one obstacle Flanagan sees in front of Emirates’ future growth.

Having suffered recent setbacks in securing landing rights in Germany and Canada, Flanagan believes much of the blame can be attributed to one culprit: German carrier Lufthansa.

“Lufthansa hates us with a passion,” he says of Europe’s second largest carrier. Emirates has been looking to acquire further landings rights in Germany since 2004, and Flanagan says he is confident the Dubai airline will eventually secure the extra routes as there was sufficient market demand.

“[Lufthansa] can’t touch us in Germany as the government seems to quite like us. Berlin is asking for us; Stuttgart is asking for us and we’ll get them sooner or later,” he says with gusto.

Of course, he’s not the only Emirates executive to accuse the German carrier of trying to undermine it. Tim Clark, the Middle Eastern carrier’s president, told Bloomberg last year Lufthansa’s “mantra is to take the Gulf carriers down.”

Despite the setbacks in Europe, Emirates has launched a new advertising and marketing campaign — branded ‘Hello Tomorrow’ — to position itself as a truly global business player.

“It is very global,” says Flanagan. “It also has an internal effect as it shows the staff we are growing all the time and tomorrow we will bigger and better all the time.”

In the last year, Emirates launched new routes to Copenhagen, Geneva, Dublin, Buenos Ares, Seattle, Dallas, Lusaka, Harare, St Petersburg Baghdad and Rio de Janeiro — while Ho Chi Min City, Washington, Barcelona and Lisbon are also set to be added to the global reach from Dubai.

“We cover practically everywhere you care to mention now… With the aircraft we have, we can connect any two points in the world, from east to west and north to south,” he says proudly.

With such fast-paced growth, Flanagan says he finds it difficult to understand the attitude in his native homeland and the British opposition to aviation expansion.

“We’ve been growing about 20 percent a year in measurable costs and we will continue to do so… I can’t understand the attitude of Britain to airports, because everyone agrees that passenger traffic will grow at five percent a year and this is definite.

“That means in 30 years twice as many people will be flying in the air as there is at the moment. Not only does London need a third runway, it needs another airport also,” he believes.

No one can ever question the role Flanagan has played in the Emirates story. But after an hour in his company, even at the age of 83, you get the feeling there are still plenty of air miles to come from him.

Maurice Major

A key architect in the phenomenal growth of Emirates Airline and Group, having overseen dnata’s operations and subsequently every stage in Emirates’ remarkable rise from regional carrier with two aircraft to global giant with a fleet of more than 170 aircraft.

Mr Flanagan arrived in Dubai in 1978 when he was appointed director and general manager of dnata. It was a move which would shape his life as six years later he led the ten-man team which hatched the incredible plan to launch an airline in five months on a budget of just $10m, with no protection against competition in Emirates’ home market, and no subsidy of any kind.

He was the managing director for the inaugural Emirates flight in 1985 and his pivotal role in the company’s development was recognised in 1990 when he was appointed group managing director of Emirates Group. Flanagan became vice chairman and group president in July 2003 and was promoted to his current role in 2006.

He started his career in 1953 with BOAC, the forerunner of British Airways, as a graduate trainee after serving in the Royal Air Force as a navigation officer. He ascended through a variety of overseas posts and returned to the UK in 1965 as a route planning manager. In 1974, he joined British Airways’ senior management team where he gained the experience which prepared him for the massive part he would play in the history of Emirates. He regards himself fortunate to have served since the start of the airline under its charismatic chairman, HH Sheikh Ahmed Bin Saeed Al Maktoum, and with the support of an exceptionally talented group of colleagues.

In the 2010 Queen’s Birthday Honours, Flanagan was invested as a Knight Commander of the British Empire (KBE) for services to the British aviation industry and British exports. Previously he had been invested as Commander of the British Empire (CBE) in 2000, in recognition of his contribution to community relations in the UAE and services to aviation.

In 2004, he was honoured by Flight International as its Personality of the Year and received an award from Airline Business for his role in the transformation of Emirates into a world force in aviation. In addition, Flanagan was inducted into the British Travel Industry Hall of Fame in 2005 for his significant contribution to the sector. The same year Flanagan became only the second person to be presented a Lifetime Achievement Award from the Official Airline Guide. It was presented both for his part in developing Emirates into a major global airline and for more than 50 years of dedicated service to the aviation industry.

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