The Emirates Advantage… Not just subsidies
04-19-2015, 05:12 PM
#121
Gets Weekends Off
Joined APC: Jun 2009
Posts: 5,113
Originally Posted by Gillegan
I agree, we all have our biases though I'm no longer an Emirates pilot. As far as having a neutral, I also agree and don't think asking them to open their books is too much to ask for. Whether they would or not - if this were arbitrated by some body like the WTO, I would think they would have to.
04-19-2015, 06:04 PM
#122
Gets Weekends Off
Joined APC: Aug 2005
Position: tri current
Posts: 1,485
Originally Posted by Sink r8
Thanks, TP.
I still maintain that you don't, or shouldn't, have the tools to draw conclusions on yields based on anectdotal (or even accurate) info on load factors, or what an individual BE ticket is sold for.
I still maintain that you don't, or shouldn't, have the tools to draw conclusions on yields based on anectdotal (or even accurate) info on load factors, or what an individual BE ticket is sold for.
What I fear for the U.S. carriers is this: They have become successful over the last few years by a capacity reduction theme. That theme worked for the domestic and maybe even some of the trans-Atlantic flying, but using the same strategy in growing international markets could well be their undoing.
Remember, it's not all about the passengers. The under-belly freight adds significant revenue to the operation if marketed and managed properly. Down gauging equipment and reducing to less than daily service can adversely affect the potential for under-belly freight revenue.
As for the second point, are you currently a line pilot?
TP
04-20-2015, 08:04 PM
#123
On Reserve
Joined APC: Jul 2008
Position: MSP7ERB
Posts: 1,886
Wall Street Journal article 04/20/2015
U.S. Airlines Claim to Document Subsidies at Gulf Rivals
Delta hired gumshoes to find back call for Open Skies treaty revisions
U.S. airlines are pressing the U.S. to revise open skies agreements with Emirates Airlines, Etihad Airways and Qatar Airways, claiming to have found documents that support claims the trio have received unfair benefits and subsidies.
By SUSAN CAREY And RORY JONES
April 20, 2015 7:39 p.m.
As the battle intensifies over U.S. airlines’ allegations of unfair state subsidies to three Persian Gulf rivals, a look at how the American carriers gathered data to support their claims sheds light on the vast financial reporting divide between the two sides.
Alarmed by the rapid U.S. expansion of Emirates Airline, Etihad Airways and Qatar Airways, Delta Air Lines Inc. two years ago hired forensic accountants to learn more about the overseas carriers’ funding. All three are government-owned, and Etihad and Qatar don’t issue public financial statements.
The effort—later joined by American Airlines Group Inc. and United Continental Holdings Inc.—culminated in a trade complaint lodged in January with the U.S. government. The U.S. carriers claim the documents they found show the Gulf trio has received $42 billion in subsidies and unfair benefits since 2004, including about $17 billion for Abu Dhabi-based Etihad, and $16 billion for Doha-based Qatar Airways. The Gulf carriers say they are commercial enterprises that aren’t state subsidized.
Delta hired investigators to dig into their financial histories. The three U.S. carriers say their gumshoes discovered about a year ago that they could request and obtain copies of financial statements for the three from corporate registry offices in some countries where the Gulf airlines operate.
The investigators, which the airlines wouldn’t name, searched in nearly 30 jurisdictions, assembling their dossier mostly from documents filed in the U.K., Singapore, Australia, India, Belgium and Ireland, said Jill Zuckman, spokeswoman for the U.S. airlines’ coalition, called Partnership for Open & Fair Skies. They also used bond-offering prospectuses for the Gulf carriers and their governments to compile data.
The picture remains incomplete, Ms. Zuckman said, given the often interlocking relationships among the Gulf governments, airlines, airport authorities and aviation service providers. The U.S. coalition, which previously issued only a summary of its claims, said it will release all its documents on Tuesday, giving the Gulf carriers their first chance to evaluate and respond to the assertions.
The U.S. airlines said they amassed 44 documents totaling 1,021 pages. The Wall Street Journal has viewed many of them, at least one of which is in Flemish. Among other information, they indicate that international auditors at times endorsed two of the airlines as viable businesses—or “going concerns”—contingent on further financial backing from their shareholders.
In Etihad’s 2013 annual report, for example, KPMG LLP said it audited the accounts on a going-concern basis “notwithstanding the fact that the group had accumulated losses of $3.76 billion” as of December 2013. KPMG said it had prepared the 2013 statements based on approval of $3.5 billion in additional shareholder funding in 2014 by Abu Dhabi’s ruling body.
The U.S. carriers, citing at least nine years of Etihad financial statements, claim such shareholder funding was part of $17 billion in state subsidies provided to Etihad since 2004.
Etihad says it has received equity investments and loans from its government. It says it can’t comment on specific claims because it hasn’t seen the full documentation behind the U.S. carriers’ previously issued summary.
The U.S. airlines said they also assembled 19 years of annual accounts for Qatar Airways that show it received $16 billion in total subsidies since 2004.
In Qatar Airways’ 2009 financial statement, auditor Ernst & Young LLP reported that the current- and previous-year losses exceeded 50% of company capital. A special meeting was convened that year to weigh options including dissolving the company. Shareholders decided instead to fund its liabilities.
In the same statement, the auditors noted that the government loans were non-interest bearing, had no specific repayment terms and could be converted to equity because repayment wasn’t likely to occur in the foreseeable future.
Qatar Airways said Chief Executive Akbar Al Baker is expected to address the U.S. carriers’ allegations in presentations scheduled for May 13.
Emirates has published its financial statements for the past 13 years and is starting to make earlier reports available as well. But the U.S. carriers claim they also uncovered evidence that it received at least $5 billion in subsidies since 2004.
Among other things, they pointed to a reduction from 15.1 billion U.A.E. dirhams to 5.6 million dirhams in fuel-price hedging contracts on its books between 2008 and 2009, a time when many airlines took hedging losses after jet fuel prices tumbled. The majority of the contracts were transferred to a Dubai government holding company, the financial statement said. PricewaterhouseCoopers LLP audited the books.
Emirates declined to comment on the hedging contracts. Last week, it said it had requested that the U.S. government release the materials received from the U.S. airlines, as well as information it had requested from them, so Emirates can “defend itself against the pernicious falsehoods that have wrongly been advanced against it.”
Emirates, Etihad and Qatar Airways say they abide by International Financial Reporting Standards. Qatar’s books also make that claim. All three companies say they have earned their burgeoning traffic with superior service and a range of new destinations. KPMG, PricewaterhouseCoopers, and Ernst & Young declined to comment on client accounts.
The U.S. carriers want the Obama administration to revise existing “open skies” air treaties with Qatar and the United Arab Emirates to account for the purported government aid. Meanwhile, the U.S. carriers also want the government to freeze additional Gulf airline service to the U.S., retroactive to January, restricting planned new routes.
The Gulf carriers and open skies air treaties generally have won support from U.S. cargo airlines, discount carriers such as JetBlue Airways Corp., and U.S. airport and tourism groups. Centre for Aviation, a respected Australian aviation researcher, took the U.S. airlines to task in a recent report for failing to account for the customer benefits such new airplanes, exotic destinations and lower fares provided by the Gulf carriers and not demonstrating serious harm to U.S. airlines by their expansion.
Delta hired gumshoes to find back call for Open Skies treaty revisions
U.S. airlines are pressing the U.S. to revise open skies agreements with Emirates Airlines, Etihad Airways and Qatar Airways, claiming to have found documents that support claims the trio have received unfair benefits and subsidies.
By SUSAN CAREY And RORY JONES
April 20, 2015 7:39 p.m.
As the battle intensifies over U.S. airlines’ allegations of unfair state subsidies to three Persian Gulf rivals, a look at how the American carriers gathered data to support their claims sheds light on the vast financial reporting divide between the two sides.
Alarmed by the rapid U.S. expansion of Emirates Airline, Etihad Airways and Qatar Airways, Delta Air Lines Inc. two years ago hired forensic accountants to learn more about the overseas carriers’ funding. All three are government-owned, and Etihad and Qatar don’t issue public financial statements.
The effort—later joined by American Airlines Group Inc. and United Continental Holdings Inc.—culminated in a trade complaint lodged in January with the U.S. government. The U.S. carriers claim the documents they found show the Gulf trio has received $42 billion in subsidies and unfair benefits since 2004, including about $17 billion for Abu Dhabi-based Etihad, and $16 billion for Doha-based Qatar Airways. The Gulf carriers say they are commercial enterprises that aren’t state subsidized.
Delta hired investigators to dig into their financial histories. The three U.S. carriers say their gumshoes discovered about a year ago that they could request and obtain copies of financial statements for the three from corporate registry offices in some countries where the Gulf airlines operate.
The investigators, which the airlines wouldn’t name, searched in nearly 30 jurisdictions, assembling their dossier mostly from documents filed in the U.K., Singapore, Australia, India, Belgium and Ireland, said Jill Zuckman, spokeswoman for the U.S. airlines’ coalition, called Partnership for Open & Fair Skies. They also used bond-offering prospectuses for the Gulf carriers and their governments to compile data.
The picture remains incomplete, Ms. Zuckman said, given the often interlocking relationships among the Gulf governments, airlines, airport authorities and aviation service providers. The U.S. coalition, which previously issued only a summary of its claims, said it will release all its documents on Tuesday, giving the Gulf carriers their first chance to evaluate and respond to the assertions.
The U.S. airlines said they amassed 44 documents totaling 1,021 pages. The Wall Street Journal has viewed many of them, at least one of which is in Flemish. Among other information, they indicate that international auditors at times endorsed two of the airlines as viable businesses—or “going concerns”—contingent on further financial backing from their shareholders.
In Etihad’s 2013 annual report, for example, KPMG LLP said it audited the accounts on a going-concern basis “notwithstanding the fact that the group had accumulated losses of $3.76 billion” as of December 2013. KPMG said it had prepared the 2013 statements based on approval of $3.5 billion in additional shareholder funding in 2014 by Abu Dhabi’s ruling body.
The U.S. carriers, citing at least nine years of Etihad financial statements, claim such shareholder funding was part of $17 billion in state subsidies provided to Etihad since 2004.
Etihad says it has received equity investments and loans from its government. It says it can’t comment on specific claims because it hasn’t seen the full documentation behind the U.S. carriers’ previously issued summary.
The U.S. airlines said they also assembled 19 years of annual accounts for Qatar Airways that show it received $16 billion in total subsidies since 2004.
In Qatar Airways’ 2009 financial statement, auditor Ernst & Young LLP reported that the current- and previous-year losses exceeded 50% of company capital. A special meeting was convened that year to weigh options including dissolving the company. Shareholders decided instead to fund its liabilities.
In the same statement, the auditors noted that the government loans were non-interest bearing, had no specific repayment terms and could be converted to equity because repayment wasn’t likely to occur in the foreseeable future.
Qatar Airways said Chief Executive Akbar Al Baker is expected to address the U.S. carriers’ allegations in presentations scheduled for May 13.
Emirates has published its financial statements for the past 13 years and is starting to make earlier reports available as well. But the U.S. carriers claim they also uncovered evidence that it received at least $5 billion in subsidies since 2004.
Among other things, they pointed to a reduction from 15.1 billion U.A.E. dirhams to 5.6 million dirhams in fuel-price hedging contracts on its books between 2008 and 2009, a time when many airlines took hedging losses after jet fuel prices tumbled. The majority of the contracts were transferred to a Dubai government holding company, the financial statement said. PricewaterhouseCoopers LLP audited the books.
Emirates declined to comment on the hedging contracts. Last week, it said it had requested that the U.S. government release the materials received from the U.S. airlines, as well as information it had requested from them, so Emirates can “defend itself against the pernicious falsehoods that have wrongly been advanced against it.”
Emirates, Etihad and Qatar Airways say they abide by International Financial Reporting Standards. Qatar’s books also make that claim. All three companies say they have earned their burgeoning traffic with superior service and a range of new destinations. KPMG, PricewaterhouseCoopers, and Ernst & Young declined to comment on client accounts.
The U.S. carriers want the Obama administration to revise existing “open skies” air treaties with Qatar and the United Arab Emirates to account for the purported government aid. Meanwhile, the U.S. carriers also want the government to freeze additional Gulf airline service to the U.S., retroactive to January, restricting planned new routes.
The Gulf carriers and open skies air treaties generally have won support from U.S. cargo airlines, discount carriers such as JetBlue Airways Corp., and U.S. airport and tourism groups. Centre for Aviation, a respected Australian aviation researcher, took the U.S. airlines to task in a recent report for failing to account for the customer benefits such new airplanes, exotic destinations and lower fares provided by the Gulf carriers and not demonstrating serious harm to U.S. airlines by their expansion.
04-20-2015, 08:33 PM
#124
Line Holder
Joined APC: Nov 2013
Position: MD-80 Captain
Posts: 48
US review of Gulf carriers should establish facts vs fancy | ATW Editor's Blog
ATW Editor's Blog
US review of Gulf carriers should establish facts vs fancy
by Karen Walker Apr 19, 2015
As the campaign led by American Airlines, Delta Air Lines and United Airlines sped from secret briefings in Washington DC to the broad media and loud finger-pointing, one thing became clear. The US carriers are eager for a fight against Emirates, Etihad and Qatar and their state owners. So if there’s to be a bruising, then the facts should be established in as far as they are directly relevant to what is or is not fair competition.
The US government review, therefore, is a welcome step. But its fact-proving (or dismissal) must be a fully public and transparent process. All parties and stakeholders should be given full access to the evidence, and both sides be given a full, fair and equal hearing.
Most important, regulators must not look at this as an American issue. The CEOs of the three US carriers, backed by labor groups, are painting this as an issue about American jobs. That’s a ploy to gain local support in what is indisputably a global issue.
America’s draconian restrictions on foreign ownership of US airlines and prohibition of cabotage mean that American airline jobs benefit from a very high level of government protection – not just from the Gulf carriers, but from any foreign airline that might wish to compete within what is still the world’s largest commercial aviation market.
Those American benefits extend to the hugely important and lucrative transatlantic market, where each of the three US carriers has antitrust agreements with Europe’s largest airlines.
It is against those significant and highly advantageous terms that the Gulf carriers have had to establish themselves from scratch and compete in the global market. Yes, the Gulf carriers have injected new competition into the US market, but only on international routes, the vast majority of them in markets the three American carriers were not willing to serve. For as long as American, Delta and United were focused on fighting each other in the higher-yield US domestic and transatlantic markets, their interest in India and the sub-Indian continent was weak to non-existent. They regarded it as an operationally expensive and difficult market with no clear return on investment.
The Gulf carriers viewed it differently; they saw an emerging market gap and were willing to take a risk.
Even if the US campaign somehow manages to roll back the US Open Skies agreements with the UAE and Qatar – which would be a travesty – or curtail the growth of US city destinations served by the Gulf carriers, regulators should carefully examine evidence that the US carriers would, indeed, step up and operate to those sub-Indian destinations.
Regulators could note, for example, the recent behavior of Delta which, having been given the Seattle-Haneda route on a basis that locked out competitors, blatantly abandoned the service.
If the Gulf carriers are locked out of the services they currently bring to US passengers, what’s to say the US airlines won’t sit back and say, ‘mission accomplished’?
ATW Editor's Blog
US review of Gulf carriers should establish facts vs fancy
by Karen Walker Apr 19, 2015
As the campaign led by American Airlines, Delta Air Lines and United Airlines sped from secret briefings in Washington DC to the broad media and loud finger-pointing, one thing became clear. The US carriers are eager for a fight against Emirates, Etihad and Qatar and their state owners. So if there’s to be a bruising, then the facts should be established in as far as they are directly relevant to what is or is not fair competition.
The US government review, therefore, is a welcome step. But its fact-proving (or dismissal) must be a fully public and transparent process. All parties and stakeholders should be given full access to the evidence, and both sides be given a full, fair and equal hearing.
Most important, regulators must not look at this as an American issue. The CEOs of the three US carriers, backed by labor groups, are painting this as an issue about American jobs. That’s a ploy to gain local support in what is indisputably a global issue.
America’s draconian restrictions on foreign ownership of US airlines and prohibition of cabotage mean that American airline jobs benefit from a very high level of government protection – not just from the Gulf carriers, but from any foreign airline that might wish to compete within what is still the world’s largest commercial aviation market.
Those American benefits extend to the hugely important and lucrative transatlantic market, where each of the three US carriers has antitrust agreements with Europe’s largest airlines.
It is against those significant and highly advantageous terms that the Gulf carriers have had to establish themselves from scratch and compete in the global market. Yes, the Gulf carriers have injected new competition into the US market, but only on international routes, the vast majority of them in markets the three American carriers were not willing to serve. For as long as American, Delta and United were focused on fighting each other in the higher-yield US domestic and transatlantic markets, their interest in India and the sub-Indian continent was weak to non-existent. They regarded it as an operationally expensive and difficult market with no clear return on investment.
The Gulf carriers viewed it differently; they saw an emerging market gap and were willing to take a risk.
Even if the US campaign somehow manages to roll back the US Open Skies agreements with the UAE and Qatar – which would be a travesty – or curtail the growth of US city destinations served by the Gulf carriers, regulators should carefully examine evidence that the US carriers would, indeed, step up and operate to those sub-Indian destinations.
Regulators could note, for example, the recent behavior of Delta which, having been given the Seattle-Haneda route on a basis that locked out competitors, blatantly abandoned the service.
If the Gulf carriers are locked out of the services they currently bring to US passengers, what’s to say the US airlines won’t sit back and say, ‘mission accomplished’?
04-21-2015, 02:53 AM
#125
Otto
Joined APC: Jul 2013
Position: Turkish Pile Driver
Posts: 1,806
The US government doesn't think long term and is led by a man who makes Chamberlain look like Genghis Khan. On one hand we have a (currently) profitable airline industry and on the other a dire need to use Al-Dhafra Air Base, UAE ports, and UAE airspace. The US government will not mess with open skies and risk angering the UAE. Even Bush kowtowed to the oil monarchies, Obama is worse (for different reasons). I expect no relief from the US government, I hope I am wrong.
04-21-2015, 03:09 AM
#126
The Brown Dot +1
Joined APC: Jun 2009
Position: 777B
Posts: 7,775
Originally Posted by MikeF16
The US government doesn't think long term and is led by a man who makes Chamberlain look like Genghis Khan. On one hand we have a (currently) profitable airline industry and on the other a dire need to use Al-Dhafra Air Base, UAE ports, and UAE airspace. The US government will not mess with open skies and risk angering the UAE. Even Bush kowtowed to the oil monarchies, Obama is worse (for different reasons). I expect no relief from the US government, I hope I am wrong.
04-22-2015, 02:11 PM
#127
Gets Weekends Off
Joined APC: May 2009
Posts: 474
http://www.openandfairskies.com/wp-c...Financials.pdf
1000 pages(!) of the data used to support the subsidies claim. No, I haven't read it
1000 pages(!) of the data used to support the subsidies claim. No, I haven't read it
04-22-2015, 05:58 PM
#129
Gets Weekends Off
Joined APC: Sep 2008
Position: "Prof" button manipulator
Posts: 1,685
Originally Posted by ShyGuy
Took 13 pages to blame Obama. You guys are slackin'
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