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Thu 28 Apr 2011 04:47 PM

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Dubai's Emirates to spend $10bn a year to expand fleet

State-back firm sitting on considerable cash, will tap debt markets to support expansion, says senior exec

Dubai's Emirates to spend $10bn a year to expand fleet
Emirates unveils financial results for the second half of 2010 on May 10
Dubai's Emirates to spend $10bn a year to expand fleet
Emirates Airlines chief executive officer Sheikh Ahmed bin Saeed Al Maktoum

Emirates, the Arab world's largest airline, will spend about $10bn a year to fund its fleet expansion over three years but is not under pressure to tap the bond market, a senior official said.

The Dubai government-owned carrier, which expects to receive about 30 aircraft a year for the next three, dropped plans for a bond to finance expansion after political unrest in the Middle East made rates more expensive.

"Emirates has roughly 30 aircraft a year coming the next five years and a lot of them are A380s ... we will need about $10bn a year," Gary Chapman, president group services and Dnata at Emirates Group said.

Chapman said the company is sitting on considerable cash but will eventually tap debt markets to support an enormous capital expenditure programme due to its expansion plans.

"Any airline taking 30 aircraft a year will have considerable financial requirements," said Chapman.

He said the company is not under pressure to look for funding and is waiting for the right pricing.

"With what's going on in the region in February, that's created some issues in terms of the margins. We'll wait until our results come out and reassess the situation."

Emirates unveils financial results for the second half of 2010 on May 10.

Emirates, the biggest customer for the Airbus A380 superjumbo, surprised its peers by boosting its orders to 90 planes last June and said they were looking at ordering more.

Chapman said the company, which repaid a $500m bond in March, will look at dirham and dollar-denominated bonds.

"There is lot of liquidity out there today in dirhams ... banks are flushed with dirhams. We will continue to explore that and we are looking at dollar bonds."

Chapman, who is also the president Emirates Group's airline services arm, Dnata, said the unit is looking at acquisitions in Asia and the Gulf Arab region in the wake of its purchase of the flight catering unit of Italy's Autogrill SpA  last year.

Dnata, which provides ground handling, cargo, travel and flight catering, launched a branding campaign on Thursday aimed at boosting its profile abroad.

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