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Welcome Aboard Emirates Airlines. Fareeda Gaffoor, Janita Kanjibhai, Jennifer Koenig, Devanshi Patel, Sara L. Yue .

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Welcome Aboard Emirates Airlines

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Welcome Aboard Emirates Airlines

Fareeda Gaffoor, Janita Kanjibhai, Jennifer Koenig, Devanshi Patel, Sara L. Yue


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“When Paul Astin, a British executive of a big construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”New York Times - January 5, 2003


Agenda l.jpg
Agenda construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”

غMiddle East Region Overview

  • United Arab Emirates

    • Political

    • Social

    • Economic

  • Airline Industry

  • Company Overview

  • Emirates Airline Valuation

  • Project – New York/ Dubai Route

  • Conclusions

  • Q&A


Middle east overview l.jpg
Middle East Overview construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”

  • Characterized by countries whose economies are over-dependent on oil

  • Differ on size, wealth, and political agendas

  • UAE, Saudi Arabia and Qatar enjoy higher GDP per capita compared to other countries (Iraq, Iran, Syria) due to more political stability


United arab emirates l.jpg
United Arab Emirates construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”

  • British - Trucial States (150 yrs)

  • Perpetual Treaty of Maritime Truce (1850s)

  • Federation state formed on December 2, 1971

  • Seven Emirates: Abu Dhabi, Dubai, Ajman, Fujairah, Sharjah, Ras Al-Khaimah, and Umm Al-Qaiwain


Political structure l.jpg
Political Structure construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”

غFederal Supreme Court, Supreme Council, Cabinet of Ministers, Parliamentary Body, Federal National Council and an independent judiciary

غ President: Sheikh Zayed bin Sultan Al Nuhayyan, ruler of Abu Dhabi

غ Vice President & Prime Minister: Sheikh Maktoum bin Rashid Al Maktoum, ruler of Dubai

غ No political parties

غ Ruling families

“It’s all in the family”


Social structure l.jpg
Social Structure construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”

  • Population: 3,480,000 people

  • Religion: Muslim (96%)

  • Spoken Language: Arabic

  • Labor force: 1.6 million people

    • 78% in services, 15% in industry and 7% in agriculture


Economic structure l.jpg
Economic Structure construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”

غ2001 GDP: $67.6 bn or $21,000 bn per capita

غ 70% of government revenue from oil production

غ Free zones

غ Dirham pegged against dollar

غ Uneven oil distribution among 7 emirates

  • Markets

    • Dubai Financial Market (DFM)

    • Abu Dhabi Securities Market (ADSM)

= 3.67


Us uae relations l.jpg
US & UAE Relations construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”

غEstablished formal diplomatic relationssince 1974

غ Goal: security assistance and the shared commitment to security and stability of the Gulf region

غ Link of petroleum

غ Gulf War

غ September 11th: UAE severed its ties to the Taliban


Current situation l.jpg
Current Situation construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”

  • UAE lends help to the US

    • Access to its airfields

  • President Zayed attempt for peace in the Middle East

    • Urge Arab world to ask Hussein to step down

    • Telephone conversation between Zayed and Bush

  • Altered attitude since US air strikes on Iraq


Airline industry l.jpg
Airline Industry construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”

  • History

  • Conflicts:

    • Economy

    • Terrorism

    • War in Iraq

    • SARS


Costs l.jpg
Costs construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”

  • Labor

  • Aircraft maintenance

  • Debt servicing

  • Fuel

  • Aircraft delays


Industry ratios l.jpg
Industry Ratios construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”

  • Load Factor :

    passenger-kilometers expressed as a percentage of seat-kilometers

  • Revenue Passenger Kilometers : the number of revenue passengers carried on each flight stage by the flight stage distance

  • Available Seat Miles :

    the number of passenger seats available for sale on each flight stage by the stage distance


Competitors l.jpg
Competitors construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”


Company overview l.jpg
Company Overview construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”

  • Launched in 1985 to boost tourism in Dubai

  • Currently services 60 destinations in 42 countries

  • Emirates strives to be known as an international airline based in the Middle East rather than just an Arabic airline that flies abroad


Emirates the finest in the sky l.jpg
Emirates: “the finest in the sky” construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”

  • Received over 200 international awards of excellence

  • First Middle Eastern Airline to win Passenger Service Award

  • One of the youngest fleet of aircraft in the business- 3 years


When the going gets tough emirates gets going l.jpg
“When the going gets tough Emirates gets going” construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”

  • Gulf War

    • Only airline to continue flying to Kuwait

    • Increased number of flights by picking up competitors’ slack

  • Still profitable despite open skies policy at Dubai International Airport


Post september 11 th l.jpg
Post September 11 construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”th

  • Posted an 11% increase in net profits in 2001

  • Increased flight service to Pakistan and Afghanistan

  • Announced plan to purchase 58 new aircraft as part of expansion strategy - Cost:$15 Billion

  • 22 aircraft are Airbus 380-800 largest aircraft in production- to be used for Dubai-New York route


Current emirates situation l.jpg
Current Emirates Situation construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”

  • Currently increasing number of flights out of Dubai, especially to Southeast Asia

  • War not really effecting business due to no direct flight with the United States

  • Expansion routes planned for New York, San Francisco, Atlanta and Chicago


Ratio analysis l.jpg
Ratio Analysis construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”


Financial status l.jpg
Financial Status construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”

  • Government-owned but does not receive subsidies

  • Dh1.5 billion bond issuance in June 2001

    • First Emirates Airlines bond issue

    • Largest dirham-denominated bond issue

    • First to be listed on Dubai Financial Market

  • Private-equity

1.5 Billion Dirhams!!


Relative valuation l.jpg
Relative Valuation construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”

  • Comparable firm selection

    • Beta

    • Growth

    • Route structure

    • Size

  • TEV and Equity multiple analysis

  • Equity value of $4.01 billion using EBITDA multiple


Calculating the wacc l.jpg
Calculating the WACC construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”

  • Cost of Debt

    • UAE sovereign risk-free rate: 2.93%

    • Altman Z-Score Rating: BBB+

    • After-tax cost of debt: 4.28%

  • Cost of Equity

    • Built-up Beta: 0.87

    • S & P IFCG Market Return

    • Cost of equity: 7.79%

  • WACC: 5.48%


Discounted cash flow valuation l.jpg
Discounted Cash Flow Valuation construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”

  • Cash flow estimation

    • Margin analysis

    • 5-year projection

  • Equity Value: $4.72 Billion

  • Relative Valuation: $4.01 Billion

  • EVA: $39.5 million


Route expansion l.jpg
Route Expansion construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”

  • Should Emirates Airlines add a direct flight between New York and Dubai to its route structure in 2004?

    Project Valuation

  • Determining Discount Rate

    Adjusted beta for added risk = 1.37

  • Estimating Cash Flows

    • Malaysia Airlines Newark-Dubai revenue percentage

    • Costs based on Emirates current route structure

  • Initial Outlay – Utilization percentage multiplied by cost of Airbus A380-800


  • Dcf valuation l.jpg
    DCF Valuation construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”

    Emirates Airlines should not begin flying to New York in 2004


    Option to delay for one year l.jpg
    Option to Delay for One Year construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”


    Conclusions l.jpg
    Conclusions construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”

    • Emirates Airlines is a profitable company that consistently beats industry standards by emphasizing quality service and pursuing strategies that appear to contradict what majority of carriers follow

    • Route Expansion between New York and Dubai should begin in 2005

      Thank you for flying with

      Emirates Airlines!


    Slide29 l.jpg

    Questions ? construction company here on the Persian Gulf, travels by air, he no longer drives to the airport. His favorite airlines, Emirates Airlines, sends a car to pick him up, as it does with all its business and first-class passengers in London, Paris, Hong Kong, and 12 other cities. In business class he has a choice of 48 movie cassettes he can load when he wants, and a couple of dozen music and talk programs. Even in economy, passengers may choose from 17 movies and 18 video games available on personal screens. Mr. Astin dines on meals set on pink linen and sips fine wines.”

    His HighnessSheikh Ahmed bin Saeed Al-Maktoum,Chairman


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