The Chairman of state-owned Emirates sparked a ripple of interest this week after raising the possibility of selling shares in the Dubai-based airline. Emirates is one of many big assets now tightly held by the Government of Dubai via subsidiary companies.

Emirates Chairman raises IPO subject at Dubai Air Show

But the Government is making moves to list some other jewels in their crown. The Dubai Government wants to raise some cash and also make their state-owned entities more competitive.

The Chairman of Emirates, Sheikh Ahmed bin Saeed Al Maktoum, was pressing the flesh at the Dubai Air Show this week and commented on the possibility of Emirates or parts of it listing on the stock market.

"We are one of the companies owned by the Government of Dubai. I’m sure that the Dubai Securities and Exchange Higher Committee will be announcing which company will be listed next," Sheikh Al Maktoum was reported telling Gulf Business magazine.

"Within Emirates Group, one or two units could be listed. There are many successful businesses that we run.” 

It is worth noting Sheikh Al Maktoum raises the possibility of the Dubai Government listing parts of Emirates. For instance, Emirates owns Dnata, the highly successful cargo, ground handling, catering, retail, and travel services business.

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Talk of Emirates listing isn't new

President of Emirates, Tim Clark, said the idea of listing Emirates was "out there," But he argued the high-profile airline could be attractive to investors.

"The pandemic has set us back, of course, but as you know, the profitability of Emirates is a well-known fact,” said Tim Clark this week. “We will restore that in the next six, eight months. We’re already on the path to do that."

Scuttlebutt regarding listing Emirates isn't new. As far back as 2007, Tim Clark said any listing would value the airline between US$20 billion and $30 billion. Things aren't quite as bullish these days. Bloomberg notes Emirates is still a top ten global airline when it comes to revenue. They estimate Emirates to be worth around US$10 billion when business gets back to normal.

Structural issues at Emirates could inhibit a successful listing

But the way Bloomberg sees it, there are some inbuilt structural issues at Emirates that would deter many investors from buying shares. At its core, Emirates is a large-scale vanity project run by the Dubai Government imitating other state-owned airlines like Singapore Airlines and Cathay Pacific to boost trade and traffic in and out of the respective cities. Emirates was never set up as a profit-making airline, even though it often does manage to do so.

And that could be why Emirates doesn't get sold off as a whole. Instead, Dubai could choose to maximize the cash by selling parts of the group - the cargo business unit and Dnata, for example.

Dubai has a lot invested in the success of Emirates. While the airline largely stands on its own financially, it lends Dubai immense prestige and connectivity. While you can put a dollar value on connectivity, valuing intangibles like prestige is harder. But you'd have to assume the Dubai Government doesn't want to see that value wither on the local stock exchange.