Wednesday, Feb 15, 2012

-- Dubai Airports chief executive says company likely to decide on new corporate structure this year.

-- CEO says Dubai Airports needs to establish greater treasury autonomy to fund expansion.

-- CEO says Dubai Airports sees Singapore's Changi Airport as good model for increased commercialization. 


 
   By Sam Holmes 
   Of DOW JONES NEWSWIRES

SINGAPORE (Dow Jones)--Dubai Airports is likely to decide on a new corporate structure this year that will enable the state-owned group to stage the next leg of its aggressive expansion as a global hub, the airport operator's chief executive said.

The group, wholly owned by Dubai's government, has plans to boost the passenger and cargo capacities of the two airports it operates in the emirate over the next decade. The expansion--known as Strategic Plan 2020 or SP2020--will require a US$7.8 billion investment over the next six years.

"Most of the SP2020 program needs to be in place by 2018 and the next three years are the crucial investment cycle in that particular project," Dubai Airports Chief Executive Paul Griffiths said in an interview with Dow Jones Newswires in Singapore on Monday.

Traffic at the Middle Eastern hub has soared dramatically over the past decade--predominantly driven by connecting traffic and the success of flag carrier Emirates Airlines--and with 51 million passengers passing through the port in 2011, Dubai International Airport is now one of the busiest in the world.

The planned expansion will increase the airport's capacity to 90 million from the current 60 million through successive stages of development leading into the mid-2020s.

Dubai World Central, the group's second airport, opened in 2010 and will primarily be a cargo hub with some limited passenger handling capacity.

Dubai Airports was established in its corporatized form in 2007 with the view of eventually converting the company to a more commercial structure, a process that has been hampered by the global financial crisis, which hit Dubai's property market particularly hard in 2009 and 2010, although traffic at the airport remained relatively unaffected by wider macroeconomic problems.

Griffiths said Dubai Airports will look to finance its expansion through a variety of sources, none of which have been decided on as yet although equity raising and spinoffs are unlikely. Key to this process will be attaining greater autonomy over the group's treasury capabilities, currently a function of the Dubai Department of Finance.

While the exact model of a more distinctly commercial structure hasn't been decided upon, Griffiths said Singapore's Changi Airport--which was corporatized in 2010 but remains a wholly owned unit of Singapore state investment firm Temasek Holdings Pte. Ltd.--is a "a good example of how it could be done," especially given the alignment of aerospace operations in the city-state.

"I think the Singapore model is one we could certainly emulate with some obvious detailed differences," he said.

-By Sam Holmes, Dow Jones Newswires; +65-6415-4157; samuel.holmes@dowjones.com

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(END) Dow Jones Newswires

15-02-12 0242GMT