Emirates transparency is a lesson for Dubai Inc.
Posted on 12 December 2009 with no comments from readers
Part of the problem with the Dubai debt crisis is the actual debts left over from the oil and property boom that ended in September 2008. The other part is a horrendous PR failure.
Emirates Airline, owned by the Investment Corporation of Dubai holding company, chose to publish its debt position at the end of last week to clear up any potential misunderstandings about its financial position.
‘Gross debt is $9.9 billion and net debt is $8.2 billion. Our debt is paid over a long term,’ President Tim Clark told Gulf News.
$1.1bn fund raising
This statement came as the airline announced that it had just successfully raised $1.1 billion for Airbus A380 deliveries in what is widely acknowledged as an extremely difficult market for global credit.
Emirates has previously said its $3 billion cash flow is enough to fund its $58 billion order book, and the latest fund raising seems concrete evidence that the airline is still a good credit with global bankers.
For six months now there have been persistent rumors that the ownership of the airline has changed – with Abu Dhabi taking a large stake in the holding company – something Emirates has always and continues to deny.
Speculation about the true position is something the makes financial crises worse than they need to be. If Dubai World had made its position clear in terms of the amount of debt, who owed it and its future plans before the Eid holiday, and not after it, then the PR impact would have been far less.
Now the global press is having a field day with wild speculation. Newsletter writers tend to go a step further with exaggeration and misinformation in such circumstances, like the horribly inaccurate and self-serving analysis published by Rick Ackerman this week.
Transparency rules
The way for Dubai Inc. to counter this bad press is to come clean as Emirates Airline has done with some solid figures that global bankers will recognize as correct, or at the very least get some professional PR advice and listen to it.
Perhaps the local authorities in Dubai simply have no experience of handling a situation like the debt crisis now before them. Admittedly international experts have been engaged in rescheduling the Dubai World debt mountain but a great deal more global expertise will be needed to sort this situation out, particularly in PR.
Dubai Inc. has always tended to learn its lessons by doing but the authorities could do no better than to consult their own PR experts at Emirates on how to handle the global media. Those who have censored the press locally are an embarrassment in a world of instant global communications and have just added to the PR problem.
no Comments posted by readers:
Finsbury were on-board, removed, with Brunswick replacing them on the PR front, so the need for such entities must have been recognised.
If I recall, when one of them was appointed, it was said they had been employed to communicate the Dubai situation to Investment Bankers, primarily in the City of London, where, as we all know, most of the debts were issued from.
All of this makes this fiasco all the more inexplicable!
A problem had been identified, something which was already obvious to anybody following the situation, but it would appear having identified the problem no action was taken and Brunswick’s advice must have been ignored, if indeed they proffered any!
Good luck to Aidan Birkett, of Deloitte’s, and Mr Al Shaibani, hopefully they can achieve a restructuring which the combined masses of Dubai Inc, advised by Rothschild, plus whichever PR Company, have so obviously failed to implement since February, when the first tranche of Dubai Financial Support Fund was remitted by UAE Central Bank!
(Any word on when Jackson and O’Donnell, the primary Western Expatriate Architects of this leveraged model, will do the honourable thing?)