News Column

Dnata primed for acquisitions with Dh2.4b war chest

May 11, 2014

Alexander Cornwell Staff Reporter

Dubai: Dnata, Emirates Group's combined air services subsidiary, has a Dh2.4 billion "war chest" at its disposal for acquisitions, its President, Gary Chapman, said on Sunday, on the sidelines of the Airport Show.

"We do have Dh2.4 billion in cash so we have a nice little war chest and our Chairman, Shaikh Ahamd [Bin Saeed Al Maktoum, President of Dubai Civil Aviation and Chairman and CEO of Emirates airline and Group], is very supportive for allowing us to reinvest," he said.

Dnata, which last week reported a 1.2 per cent increase to annual profit of Dh829 million, wants to focus on growing its regional market share, however, Chapman, said he is still interested in LSG Lufthansa Service, a subsidiary of European rival, Lufthansa.

"They have to be ready to sell and they have said they're not ready," Chapman said, speaking to reporters at the Airpot Show.

A part or whole acquisition of LSG, a major in-flight catering company that consists of 156 companies with some 210 facilities in 54 countries, according to its website, would give dnata further foothold of global market share.

Lufthansa is going through a change in management with Carsten Spohr having recently taked over as chief executive from Christoph Franz.

Chapman said that the change in management could open the doors for discussions of a possible acquisition.

"With the new change in leadership, maybe they will change their approach," he said.

A Lufthansa spokesperson, meanwhile, said on Sunday that LSG is not for sale and that the new management is unlikely to change its position in the immediate future.

Middle East focus

Chapman further said he also wants dnata, which also operates 75 airports in more than 30 countries, to increase its regional focus.

"This region, Africa, Middle East, is where I would like to see us grow," he said.

Chapman, however, said there are a few opportunities due to the fragmented market and government ownership structures.

He added that talks are under way to acquire "something on the travel side that is relatively small" and that he is optimistic on the deal.

Last year, dnata made a number of acquisitions including the UK travel company Gold Medal and Australian cleaning company Broadlex.

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: Gulf News (United Arab Emirates)

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