Emirates' recent growth has been dramatic – the carrier has doubled in size every four years. And the Dubai-based airline aims to cross the $1 billion (Dh3.67bn) profits mark in the current financial year. Emirates Business talks to the man sitting in the cockpit who has successfully flown the airline year after year.
Sheikh Ahmed bin Saeed Al Maktoum is Chairman and Chief Executive of Emirates Group and Emirates airline, Chairman of Dubai Airports and President of the Dubai Civil Aviation Authority. The airline was conceived in March 1985 and had a start-up capital of $10 million and Sheikh Ahmed became Chairman when he was only 27 years old.
Under Sheikh Ahmed’s leadership Emirates has grown from a regional carrier with two leased aircraft and three destinations to become one of the top three international airlines. It boasts a fleet of about 114 aircraft and a route network spanning 99 cities in 62 countries. The airline plans to open a total of eight new passenger destinations this year, of which Cape Town has been announced.
Emirates airline was the first company in the country to start making headline acquisitions. Why did you stop after SriLankan Airlines?
When we talked about anchor acquisitions 10 years ago we never really had a strategy. Sometimes if we see that a company should change its view because its circumstances change, then we have to change. Sometimes it is easy to buy things but not so easy to manage them. It depends a lot on factors like a different culture, the environment can change and so on. We have to learn from our experience: sometimes we should buy things but it will not be as simple as you expect.
Are you close to acquiring a stake in any other international airline? Will we see the rumours of Emirates buying British Airways come true, for instance?
We have no plans at all to pick up a stake in any other airline. But in the next six months or the next year, if there is a good opportunity that we would not want to miss out on, then we will make the call.
Is $150 million a fair estimate for Emirates’ stake in SriLankan? How soon will you be selling?
Obviously, since we are not managing the airline after March, we would like to sell the stake at that price.
Qatar Airways is rumoured to be interested in buying the SriLankan stake from you. How comfortable would you be selling it to another Gulf carrier?
We would support whoever in the region would like to buy the stake from us.
So when is Emirates’ IPO going to happen?
That is the government’s call but it has to happen in the next couple of years. I am sure it will happen. We are talking about selling 20 to 30 per cent of the company within the region. From the day the government presses the button to go ahead, it will take us another year or two to launch the IPO.
Will Emirates manage to cross the $1bn profits mark this financial year?
I hope so. But the fuel price has touched $100 – that is going to have an impact.
When do you see Emirates becoming the number one airline in the world?
We are today the largest Arab carrier. And if we look at the number of aircraft we have on order, we are the biggest. But we need some time. It is not about just buying aircraft – it is about being number one. We always want Emirates to be number one in terms of the service that we offer, not just in size. We are already one of the top three airlines.
On the hotels and resorts side of your business, will we ever see Emirates becoming a global name like Jumeirah?
We already have projects in Australia and the Seychelles. But we are not a hotel management company and that area will never be our main focus. We are an airline.
Have you considered diversifying into other businesses?
We had an idea about diversifying into the cruise line business some time ago, but I felt we were not ready. Somebody came up with a business plan for a cruise line and wanted Emirates to become involved, but I was not really very supportive of the idea.
Is over-capacity going to be a danger once Al Maktoum International Airport in Jebel Ali is open?
I think there is always scope for more capacity. In the real estate sector, for instance, there is so much construction going on that people think once it is all developed Dubai will have too much capacity. We are sure that with Dubai International Airport we will always see ourselves falling behind in capacity. We are trying to finish the new terminal and concourse – which will be ready by the second quarter of this year – to be able to relieve the pressure.
We do not want to have the same capacity shortages as other airports worldwide, such as Bangkok and Hong Kong. We are trying to do our best so that we do not encounter similar problems.
Which will be Emirates’ final home – Dubai International or Al Maktoum International?
Emirates will always stay within one airport. That is something I can say. We will not have a split operation ever. But I do not know yet which airport it is going to be.
How did the Airbus A380 delays affect your targets and expansion plans?
There is no doubt that it slowed the opening of some new destinations. But that is over now. We are opening eight more destinations this year and are expecting about 22 more aircraft to be delivered between now and next year.
But it is not just about launching new destinations, it is also about increasing frequencies on existing routes. That, by itself, adds new capacity.
What happened to Emirates’ plans to launch a low-cost carrier?
There is not ever going to be an Emirates low-cost or Emirates high-cost, or whatever you’d like to call it, because I do not see why I need to do that. If I can keep the number of passengers intact why should I develop a low-cost carrier and offer a service at a cheaper rate?
What does Emirates’ investment portfolio look like?
We are investing $60 billion in aircraft acquisition and another $500 million in retrofitting of aircraft, opening new lounges, the new concourse and new facilities.
After Dubai Aerospace Enterprise experienced a couple of setbacks in global acquisitions, do you see that company encountering more problems in markets such as the United States?
We will always have to keep in mind that when we are going out to buy something it is not going to be easy and smooth because there will be a competitor. Also people sometimes try to push you. You can get it but maybe at a very high price – and if it is not feasible, we will not go ahead.
The best example is when we wanted to buy a Singapore leasing company, we put up our price and that was the last price we quoted. But somebody overbid us and we said we would not buy it just because we were there to buy it.
So it will not be the case that we will pay extra. Ego will not come into play ever.
Will we see consolidation taking place in the Dubai aviation sector whereby all aerospace operations come under a single body?
No, I do not foresee that happening. The aerospace companies will remain as separate entities.
Sheikh Ahmed bin Saeed Al Maktoum
Chairman and Chief Executive of Emirates Group and Emirates airline
Sheikh Ahmed was born in the traditional Arab fort in Shindagha. After attending school in Dubai, he studied in England before completing his education in the United States, where he gained a degree from the University of Denver, Colorado.
After graduation, he spent time receiving training, gaining a good grounding before his appointment as Emirates’ Chairman.
His achievements in aviation were honoured at the 1994 Farnborough Air Show in the United Kingdom when the Royal Aeronautical Society, one of the industry’s oldest and most respected professional associations, made him a fellow.
He says: “In running any organisation, the most important thing is to choose the right people. Having done that, the credit for what they do is theirs, not mine.”