Business The Punt

Thursday 29 September 2016

Etihiad edges out Ryanair

Published 08/06/2015 | 02:30

Ryanair CEO Michael O'Leary
Ryanair CEO Michael O'Leary
Former Taoiseach Bertie Ahern

Ryanair, headed by Michael O’Leary, has got great mileage from referring to itself as the highest rated airline in the world.

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Last year, ratings agencies Standard & Poor’s and Fitch both gave it a BBB+ rating. In June 2014, Ryanair issued an €850m Eurobond – its first ever – as part of plans to tap markets to help fund its acquisition of 180 Boeing aircraft. In March this year, it raised another €850m Eurobond.

But now it seems Ryanair has been knocked into second place on the ratings podium and can no longer claim the title of the being the world’s highest rated airline.

The title has now passed to Abu Dhabi-based Etihad, with Fitch having given the carrier an ‘A’ rating.

“We have already raised more than $11bn (€9.9bn) to support our growth, from more than 80 financial institutions around the world,” said Etihad chief executive James Hogan. “We raise that finance on commercial terms, with no sovereign guarantees or letters of comfort.”

Etihad and other Gulf carriers including Emirates have to frequently bat away allegations that they’re propped up by their oil-rich parents, insisting that they operate on a commercial basis without any financial crutches.

“We assess the legal ties between Etihad and Abu Dhabi to be limited as Etihad does not benefit from cross-default provisions and/or guarantees,” noted Fitch.

Ahern still going global

The Punt was feeling momentarily elevated when in popped an invitation to be a keynote speaker at an event in London to mark the 70th anniversary of the establishment of the United Nations being hosted next month by the Institute for Cultural Diplomacy.

Speakers this year will include former Taoiseach Bertie Ahern, and senior UK Labour party politician Keith Vaz, who’s just been reported to the British parliamentary standards commissioner.

At any rate, the Punt quickly realised that in keeping with the spirit of the United Nations, the Institute for Cultural Diplomacy has asked just about everyone in the world if they’d be interested in speaking at the event.

“Participation in the conference is open to governmental and diplomatic officials, academics, artists, journalists, civil society practitioners, private sector representatives, young professionals and students as well as other interested individuals from across the world,” it notes.

Primark could move fast in US

Dublin-based Primark will be making its debut in the United States later this year, with a flagship outlet in Boston and a number of other outlets planned on the east coast. Having expanded across Europe, the US market represents a significant opportunity – and challenge – for Primark, part of Associated British Foods (ABF). But HSBC has initiated coverage on ABF with a ‘buy’ rating, citing the foray into the United States by Primark. It says store roll-out in America could be far faster than anticipated.

“Primark’s entry into the US could herald a much faster roll-out of space than has been seen in Europe,” said HSBC. Primark still only has five stores in France, for example, and just 16 in Germany.

“Primark’s profits have increased 13 fold since 2000 to a forecast £693m in 2015, yet in many ways we see Primark now at its most interesting stage of development,” said HSBC.

Primark has done a deal in America with Sears to lease units from it.

“Its Autumn launch in the US with a pipeline of attractive stores could, if successful, herald a much faster roll-out of space, with Sears looking like it has enough spare, high quality space to keep Primark busy for years,” according to HSBC.

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