Dieuwer

Also, IAG joined the ME3 in denouncing the US3 report.
http://www.eturbonews.com/58984/wron...tes-and-qatar-

Dieuwer

Interview with Tim Clark: http://www.thenational.ae/business/a...airlines#page1

FD1971

I could not agree more, but as pointed out numerous times, I really appreciate the effort by folks like yourself or irish to put up a fight against 42 billion opponents and a few industry experts with insider knowledge.

The outcome was obvious from the start, it became worse, especially after the US3 commissioned a lot of highly paid experts to come up with a report describing the practices in greater detail.

Some ME3 appologists started to panic resulting in unpleasant comments on TV and FT. There is an old saying in German, if you do not have to hide anything, there is no reason to panic and scream.

I compared the situation of EK to parents after supporting their kid for 25 years, after all those years of financial support, their kid can finally make it without financial support from their parents,but the accumulated debt has to be paid and accounted for somehow... @:-)

This is basically the situation of EK right now and considering their debt and the debt of their owner, it is about time.

FD1971

I still like the spin he puts on the losses from the hedges, which went down the hill some years ago.

Anyway, who cares whether the debt of EK or the owner of EK increased by nearly 3 billion?

It is one big cash Register after all...

I would love to do business like this, but I guess I have to move to the land of (financial) fairy tales in order to do so.

And pointing out the obvious, that every state-owned airline received subsidies like crazy, has been my main argument, so Mr.Clark, so I really urge to come up with something different to keep us entertained.

eternaltransit

If we discount the 30 billion USD of cash/loan guarantees that EY and QR received for the moment - if I understand your point correctly, you are going further in saying that EK took billions of cash during its history to get to a stage where it could possibly be plausibly profitable/breaking even from ops.

That's the point I have trouble with, considering Dubai's relative poverty and lack of resources to do such a thing, and that total expenditure didn't even reach the 3 billion USD mark until 2002 (I appreciate you think their published information is a lie, though), and that Dubai borrowed a lot of money to do other projects. If you haven't got any transparency anyway, why wouldn't you just borrow money straight onto EKs books instead of going through this charade of publishing accounts back in the 2000s and before?

If the point is a more general one, that Dubai borrowed lots of money to build airports and hotels and tourist attractions, which had the effect of making people use EK to get to Dubai - I think you are widening the definition of subsidy to be totally meaningless, because that is a perfectly legitimate way for governments to spend their money. Infrastructure investments don't have to pay for themselves - they form part of the critical infrastructure of a country in order for it to function properly. The economic impact is unquantifiable. If that way of thinking was dominant last century, we would never have the Eisenhower Interstate System (which still doesn't pay for itself), the Marshall Plan, European motorways, energy transmission systems etc. Now that the idea that everything, in part and in full, has to pay for itself - and debt is not acceptable - has become quite popular recently, we have these problems where infrastructure starts to decay and becomes a hinderance to GDP growth as direct usage charges are politically unacceptable/don't cover costs. Germany is in fact a bit of a culprit here, along with the US. http://www.imf.org/external/pubs/ft/wp/2014/wp14227.pdf, http://www.wsj.com/articles/imf-call...ure-1431344662, https://www.imf.org/external/pubs/ft.../02/pdf/c3.pdf. So governments take on debt for a variety of reasons - and there are many governments out there with wholly state-owned companies, with high sovereign debt loads and continually run deficits.

Yet we don't accuse state owned infrastructure management companies as scams, even when they make profits with large debt loads. Take for instance, Network Rail in the UK, which made 1bn GBP profit in 2014, is a public sector organisation whose debts are now part of the sovereign's debt, borrows money from the government instead of capital markets, yet could only be considered a scam of an organisation by the most extreme libertarian economic views.

Still, that is a bit of an economic digression. The point is that infrastructure spending is perfectly legitimate, debt financing is perfectly legitimate, and it is clearly absurd to expect that any spending from which EK benefits from in an ancillary manner (as in, not targeted at them - state aid rules in the EU agree here, aid has to be on a selective basis: http://ec.europa.eu/competition/stat.../index_en.html), that EK now has to find the cash to "pay it back" in order to be seen as "clean". That is such an outrageous standard to hold any company to that I think qualifies as "panic and screaming". After all over 100 airlines and air cargo companies operate using infrastructure that both directly (such as an airport) and indirectly (low taxes for its workers and highways for them to get around) benefits them - why are they not being told to repay the cost of the historical Dubai government investments? The only thing selective here is the singling out of EK for flimsy reasons at best and quite prejudiced ones at worst.

As to the panic and screaming - I think Tim Clark has been quite measured in his responses, considering that he is accused of consistently lying through his teeth for years. It's one thing to attack the company he runs, but to be de facto personally accused of orchestrating a massive fraud I think speaks volumes about "panic and screaming" on the part of the accusers (who have yet to come up with any definitive proof apart from disbelief) rather than on Tim Clark.

Akbar Al-Baker is of course, Akbar Al-Baker - one can draw one's own conclusions about this airline. James Hogan is being rather quiet.

P.S. what is this insider knowledge though - is it a leak from the internal EK audit/finance departments showing a smoking gun of falsifying statements, or is it incomplete information from a snapshot of the network, or one small part, disclosed by people with an agenda, which is then being extrapolated to paint an inaccurate picture of the whole? Not all experts and not all insider information is of the same value - I would welcome any of that here with the associated methodology in order to push the discussion onwards from the whole "innocent until proven guilty/guilt until proven innocent" merry-go-round that we are stuck in...

eternaltransit

He isn't spinning - he's making an outright denial that he lost 3-4bn USD on those hedges. I think the final value was in the order of 700m USD judging by the published accounts. We'll never know unless Morgan Stanley start to disclose documents (or the other counterparties, if any).

Still, making a loss doesn't make you "dirty", as said before.

The idea that all of Dubai's GREs are one big sovereign entity is now, after the Dubai World default and restructure, completely discredited. Every commercial lender now knows that each entity they lend to is pretty much on their own and has to be evaluated without the idea there is an implicit sovereign guarantee.

Dubai is not one big cash register with pooled money and resources. There isn't even any money in the register!

rankourabu

Moak is president of Americans for Fair Skies, a veteran U.S. Marine Corp and Navy fighter pilot, former United States Commercial Airline pilot, and the former president of Air Line Pilots Association, International.

Yeah... Iwould trust this guy to be objective

RadioGirl

Who are the "42 billion"? That's more than 5 (nearly 6) times the world's population.
Exaggerate much?
And who are they? You mean the self-proclaimed "experts"?
What outcome? I haven't heard that there's an official conclusion to the claims and counter claims.
Here's the thing about "highly paid experts" - they tend to come up with whatever the person paying them wants them to say.
Again, we haven't seen any "detail" - just more unsubstantiated claims based on information taken out of context. Have you read the IAG response? No one is buying the US3 White paper.
And yet this thread is about EK.

Focus.
According to a self-proclaimed "expert" with no actual proof, this is the "situation". And it's about time for what?

Do you have any actual substantiated information to supply, or just more insults and vague assertions?

Dieuwer

http://www.forbes.com/sites/danielre...-vs-u-s-big-3/

Xlr

US3 have released a new study regarding the economic impact of ME3 on US3.

http://www.openandfairskies.com/wp-c...-Traffic-1.pdf

Edit: Much like any regression analysis, you can change the dependent variables to change the correlation factor. I mean, "Number of Gulf Carriers Present"? Looks quite sophomoric to me, to be honest. I would have used the number of seats instead. If they release the dataset, I would probably be able to conclude the exact opposite.

Once again:
The US has no national interest in protecting the alliance or JV partners of the US3.

GUWonder

And Etihad have released the findings of a new study regarding the US3 having received over $70 billion (USD) in government support since 2000, and their study claims that the US3's government support has had a huge economic impact on global aviation.

eternaltransit

Don't forget the thing that most jumps out at you which is that it starts from the position that the ME3 are all subsidised a priori. I don't think it's necessary to point out the fact that the issue of whether EK (at least) is receiving secret cash injections is still up for debate!

The conclusion of the report is that with the introduction of ME3 service to the US, US carriers are seeing their bookings drop. End of story - YMMV whether you think this is a bona-fide, sincere attempt at trying to fight for US national interests.

It's almost as if the argument put forward by the US3 is that every carrier has a natural right to certain amounts of traffic, passenger preferences be damned. It's not as if passengers care about in-flight services, network connectivity, fleet age, staff age (base as it may be), or all of that. No, none of those things could ever be a factor in why new competitors make people change to them...! As for the allegation of dumping, aka predatory pricing....we don't need to go over that again, do we?

All sides are able to find a kernel of truth and get a consultant to provide opinions-for-hire to peddle the various lines for the PR battle - EK has done this with their "aviation supports x amount of jobs in the EU and US of course that gets wheeled out - but the simple matter is, on the basis of independent available data, not opinion pieces or intentionally skewed snapshots of information taken out of context, the fraud argument just doesn't stack up.

Enzokk

You seem to want to try and convince yourself and others that the story of EK cannot be true. Why is that? No-one is denying that EK has received substantial help from the Dubai Government to facilitate their expansion. This, however isn't a subsidy. This is a competitive environment that they have been able to take advantage of (airport construction, low tax rates, 24 hour operations).

This is the same as the US3 is taking advantage of their domestic networks to make 10% and more margins to ensure huge profits for their shareholders. The UAE doesn't have this advantage, so they created an advantage for themselves, along with the natural advantage that they have at the "centre" of the world to transport people.

So what you are saying is that EK, even though it has received billions from the Dubai government is now making money? So you are agreeing that EK is not a scam? It has used the "subsidies" that all others have had in their past, and is now making money like the US3 and EU airlines. I hope you voted no then....

Seeing that their position is that they should have a pre-determined amount of passengers gifted to them, is it any wonder their service and aircraft are so sub-standard? They can do what they want because they will always have x amount of passengers gifted to them.

Xlr

Well, the US3 can't compete on product for price paid. For the federal government to do something as serious as open skies consultations, they need to demonstrate that:
(a) ME3 are subsidized
(b) US3 business is hurt by this

We know that their attempt at (a) didn't stack up with regards to EK, which really means their attempt at (b) means nothing in relation to competition from EK.

Dieuwer

The well-being of the Citizens of the United States should and must be the national interest of the US.
Pandering to a small section of the business landscape (such as the US3) is not in the interest of the Citizens of the United States.