Wednesday, Aug 12, 2015
Dubai: Emirates Group’s dnata is planning a series of acquisitions to widen its global footprint in efforts to strengthen the company’s image as a major multinational.
Gary Chapman, dnata President, said in an interview with Gulf News on Wednesday that talks in Europe and the Americas were finalising while the company is “looking at a few options” in Far East Asia.
“You’re going to see a few announcements certainly by the end of the year … about us expanding our global reach quite significantly,” he said at his office at the Emirates Group headquarters in Dubai.
The company is “very close” to completing the acquisition of at least one European airport operations unit, and in the “advanced” stages of acquiring several cargo handling units in the Americas from “a few niche players”. The Far East Asia deal is for a travel firm and is not in China, Chapman said but did not disclose any further details.
“We’ve had a relatively quiet period and all of a sudden I see a number of acquisitions coming up,” he said.
Dnata is aggressively growing its airport operations and travel service divisions as it bids to further cement itself as a multinational travel corporation. Last month, it acquired the cargo handling operations at Amsterdam Airport Schiphol from Belgian company Aviapartner for an undisclosed sum. It also acquired a majority stake in the United Kingdom-based cruise travel agency Imagine Cruising earlier this year.
Beyond Dubai, the company that first launched as “Dubai National Air Traffic Agency” in 1959 with a small shop in Bur Dubai souk and just two employees, is now in countries from the United Kingdom to Australia. Its airport operations are in 20 countries and its travel services division is in 65.
The aggressive expansion of the company’s international arm saw its revenue contribution increase to 60 per cent for its last financial year ending March 31, 2015, up from 20 per cent from five years ago.
Chapman said international operations will likely contribute as much as 70 per cent by the end of its current financial year.
Earlier this year, dnata reported Dh903 million in profit and Dh10.3 billion in revenues for the 12 months to March 31, 2015. It was the first time company revenues surpassed Dh10 billion.
“I’m very pleased with where we are and what we’ve achieved and I see that getting stronger,” Chapman said.
Opportunities in MEA
Elsewhere, dnata is “looking at a number of opportunities” in the Middle East and Africa in commitment to being a “home grown” Middle East organisation with a strong regional and African presence.
“This is our background … this is where we need to be,” he said.
In Africa, discussions are ongoing for dnata to operate ground handling and catering services in Angola. The Angolan talks are part of a management contract Emirates airline signed with the Angolan government in September last year, to manage the country’s national airline.
Chapman said dnata is still completing its due diligence, while speaking more generally on the Middle East and Africa, he said red tape remains an issue.
“The digestion period of doing deals in this region, the politics is very difficult and that hasn’t changed,” he said.
The company is also keeping an eye on airport catering opportunities in Saudi Arabia after previously missing out on a ground handling tender, Chapman said.
“Saudi is such a big market and certainly we would be attracted to [enter],” he said.
Previous acquisitions in the United Kingdom travel agency sector have made the company increasingly popular among Dubai’s hoteliers, who Chapman said, are happy as the company is feeding British tourists.
“They see the power of what we can do now in terms of driving business to them and to Dubai,” he said.
Global expansion
Meanwhile, the expansion of its global airport operations has garnered a lot of attention. Chapman said there has been “a lot of positive feedback from the airline community” and “recognition from our peer group as a serious player [and] maybe a threat.”
Despite its global presence and ambitions to further cement itself as a major multinational, Chapman does not see dnata emulating a global lifestyle image like that of sister company Emirates.
“It is more a B2B (business-to-business) brand,” he said.
The preference is to develop the brand through “acquisitions and growth of existing businesses” rather than majoring sporting sponsorships ... even though dnata is involved in the annual Dubai Rugby 7s tournament and has supported the Bali Legends, a rugby team set up in the aftermath of the 2002 Bali Bombings in Indonesia.
“We’re doing things but we’re doing that more because they are good causes for support, not ready-made promotion,” Chapman said.
In building its global brand, the company has a long-term strategy of rebranding all of its airport operations under the dnata name, Chapman said. In 2011, dnata rebranded Changi International Airport Services, a company established in 1977, seven years after completing the acquisition. But at least in the immediate future it will not be rebranding any of its travel agency acquisitions like Stellar Travel Services and Gold Medal Travel Group.
“You’ve got well known household trusted names … it doesn’t make sense to disturb that because then you have to start rebuilding,” Chapman said.
By Alexander Cornwell Staff Reporter
Gulf News 2015. All rights reserved.
