By Mishaal Al Gergawi, Special to Gulf News www.gulfnews.com
The recent appointment of Shaikh Ahmad Bin Saeed Al Maktoum as chairman of Dubai World comes after the group has gone through an extensive, and what some believe to be an overdue, restructuring process during which it was able reschedule its liabilities in a more optimal manner.
The former group comprises Dubai Ports World (DPW), Drydocks and Economic Freezones (formerly Jafza). The latter group comprises Limitless and Nakheel, the real estate duo, and Istithmar, the private equity arm. Many view the former as a strategic portfolio of holdings for Dubai and the latter as the opposite; where Dubai Maritime City belongs depends on how emotional or rational the person you’re asking is.
The restructuring plans have confirmed this view. In other words, Dubai World in 5-8 years will probably look more like Dubai World Logistics, which frankly is very good news. It is easy to discount the appointment as nothing more than window dressing to appease the Dubai World’s bondholders, but it is in this light, of potential synergy, that the appointment makes a lot of sense.
As opposed to the usually multi-portfolio cross-sector government executive, Shaikh Ahmad is one of the few executives in the UAE who have been able to really focus on a specific industry sector. The results are proof that this has been nothing short of a brilliant career decision.
Through his two main entities, Emirates airline and Dubai Airports, Shaikh Ahmad is the aviation man. His appointment a few years back as chief of Dubai’s oil interests was a direct derivative of his exposure to the energy sector through the aviation industry — which requires developing fair views on oil prices and the associated complex hedging strategies.
Emirates airline does passenger and cargo transport (it also includes Dnata, a travel services and ground handling company) while Dubai Airports is the airport management company that runs Dubai Airport’s terminals 1, 2 and 3, Dubai Cargo Village as well as the recently opened Al Maktoum International Airport — along with the rest of the Dubai World Central project in Jebel Ali.
So the new chairman of the soon-to-be logistics and maritime transport group is chairman of the logistics and aviation transport groups. One can only begin to wonder what epic brainstorming sessions will be held to discuss synergies that can be unlocked between both groups. The big elephant idea:
While the Emirates airline/group brand cannot be merged or related to any other group due to its identity’s sheer breadth and independent business model, merging Dubai Airports into Dubai World should be explored once the latter’s non-core assets are disposed of.
Emirates’ cargo business, on the other hand, should stay within Emirates but develop a closer working relationship with DPW. Just as Jafza and DPW were pitched to port cities around the world as the synergetic duo that would bring trade volume, so should the airports’ management capabilities.
Growing businesses won’t be hard because a) there are a lot of badly run airports around the world b) the professional reputation and goodwill DPW has garnered will go a long way to making Dubai’s airport management team the preferred operator. How well the new airport, cargo city, freezone and port in Jebel Ali all work together will be a crucial testimony to the viability of this idea.
The Dubai Aerospace Enterprises (DAE) was a bold initiative that was unfortunately spread too thin by multiple projects and too many shareholders. If anything the appointment will, in time, allow Shaikh Ahmad to achieve DAE’s objectives in a manner which he would’ve preferred all along. The activities of DAE engineering and — the now shut down — services subdivisions could be easily folded under the airport management umbrella.
It’s been well over two years since the crisis hit the region. As Dubai continues restructuring its entities, further opportunities for disposals, mergers and realignment will come about.
It is critical that we make use of all these opportunities. Corporate identities and holding structures should not prevent us from realising them in Dubai World, Dubai Holding — when its restructuring is concluded — or anywhere else for that matter.
So yes, Dubai World, Airports and Emirates now have the transport and logistics man and his synergetic vision in common.