Emirates picks four banks

Dubai's flagship carrier Emirates has picked four banks for a possible dollar bond issue, it said on Thursday, on the back of posting record profit as it seeks to raise cash for massive expansion plans.

HSBC; Deutsche Bank; Emirates NBD; and Morgan Stanley have been mandated as joint lead managers (JLMs) and joint bookrunners, according to a document seen by Reuters that was confirmed by the airline.

"Emirates can confirm the appointment of the JLMs and our intention to go on a roadshow, with a view to launching a bond if market conditions, including pricing, are favourable," the company told Reuters in an emailed statement.

Emirates, one of the region's most recognised brands globally and the Arab World's largest carrier, posted a record profit of $1.5 billion for 2010, up 52 per cent from the previous year.

However, 2011 has been tough with challenges ranging from rising oil prices and the Japanese earthquake.

Emirates also has to raise funds for 193 aircraft on order from Boeing and Airbus worth some $66bn. "We see this as a smart move - with their record-breaking financial performance, Emirates is in a great position to command favourable terms when most airlines are struggling to keep their heads above water," said Sudeep Ghai, partner at airline and airport consulting firm Athena Aviation.

Emirates, which boosted its A380 orders to 90 planes in June, already operates 15 of the superjumbos and will take delivery for the rest over the next few years.

"The most likely use of the funds is the funding of future fleet growth ... but it could also provide Emirates with a strong war chest if industry consolidation comes to the Middle East," Ghai said.

Roadshows for the bond will take in Asia, the Middle East and Europe, kicking off in Hong Kong on May 23. "If Emirates decides to go ahead with a bond issue it would be good timing given the ongoing improvement in investor sentiment towards Dubai, and of course the strong rally in credit spreads for UAE names in recent weeks," said Chavan Bhogaita, head of the markets strategy department at National Bank of Abu Dhabi.

"Emirates is one of the most blue chip issuers in Dubai and we believe there would be substantial demand for this bond given the solid credit quality of the company."

Follow Emirates 24|7 on Google News.