How much would Emirates be worth if it went public?

Founding CEO Sir Maurice Flanagan has said the world’s fastest-growing airline could be valued at around $40bn. Anil Bhoyrul tends to agree
How much would Emirates be worth if it went public?
By Anil Bhoyrul
Sat 24 Jan 2015 02:19 AM

As journalists, we love people who talk. And few do it better than the founding CEO and former vice chairman of Emirates, Sir Maurice Flanagan. The 86-year-old made a rare speech last week at Dubai’s Capital Club, during which he was asked whether the airline would ever consider floating.

He responded: “If it went public, it would be very, very clear that Emirates is not subsidised and there are no advantages from the government. It’s treated just like any other airline that is in Dubai. That would become rather more clear.”

The irony is, of course, that when it comes to transparency, few do it better than Emirates. It publishes its results in full every year, with incredible detail of the standard many public companies would be hard-pressed to match.

But of course, when you announce 26 consecutive years of profit, as Emirates did last May, the chances are you will have accumulated as many rivals as profits. Cynics tend to snipe from the sidelines that the airline must in some way be subsidised by the Dubai government, which it isn’t.

So Sir Maurice is right in one sense that going public would finally bring the curtain down on that longstanding claim. But he also raises a more interesting question on whether the airline should consider going to the stock market in the future, something that has been mooted in the past. According to him, the airline could be valued at around $40bn. That is nearly four times more than the figures bandied about in 2012. At the time, Saj Ahmad, chief analyst at StrategicAero Research, said such a sale would generate a lot of interest and could result in a payday of up to $11bn for Emirates’ owners.

“Emirates would be valued somewhere between $9bn-$11bn at today’s prices, based largely on its widebody dominated fleet and its burgeoning net cash assets that amount to over $4bn,” Ahmad said.

“Selling even a fraction of it would reel in a significant windfall… 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,” he added.

I veer more towards Sir Maurice’s figure. Thanks to Emirates’ transparency, we know that last May it reported a group profit of $1.1bn, while the airline’s profit was $887m — a staggering 43 percent rise on the year before. Having carried 44.5 million passengers in the 2013/14 financial year (a rise of 13 percent on the previous year), and when you throw in the massive brand value, $10bn looks way too low.

Any listing would make it the biggest player on the UAE stock markets, ahead of the $23bn valuation Etisalat currently holds. And needless to say, it would give the market a mega lift and mega vote of confidence — whilst bringing in cash to fund its fleet expansion. As of June 2014, its order book stood at 300 aircraft with a total value of $138bn.

As it gears up to celebrate 30 years since its first flight on 25 October 1985, there are, of course, no signs whatsoever that going public is something Emirates is considering doing. Which is a shame for investors, as there really would be no better stock to trade.

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