DAE crisis worsens with order cancellations and more key staff quitting

Meanwhile the company faces a deadline for repayment of more than US$700 million (Dh2.57 billion) of bank loans due within the next two weeks.DAE made world headlines in 2006 when it was introduced as a $15bn aircraft leasing and services company to complement Dubai's airport development boom. Its customers include Virgin Blue, Emirates, Easyjet and Kingfisher.

DAE announced last month it made a profit of $10.3m last year, a significant improvement from previous years, but it was confirmed today that the leasing company has cancelled all of its remaining Airbus orders worth $5.8 billion.

The company's total publicly disclosed debt is about $2.7bn.

DAE has 56 unfilled orders from Boeing including 15 of its newest freighters based on the 747-8 stretch jumbo, according to the U.S. company's website. The latest move puts this $9 bn order in doubt.

Boeing is expected to update its order book later today.

Air transport analyst Saj Ahmad said that DAE's order cancellations were not that surprising.  “Since 2007, it has exploded with ambition and imploded with realities of the wider marketplace. The danger now is that DAE is likely to move out of the leasing game altogether.

  “After all, there was no real pressing need to cancel these orders, many of which were not due for delivery until mid/late this decade. The fact that they have done so is so they no longer have to make airplane progress payments, they strengthen what they have in their coffers and can exit the leasing business quietly and without fanfare.

  “The small numbers of jets it has on lease will be offloaded eventually and the stunning reversal of fortunes at DAE shows how big ambitions can come crashing down, Ahmad said. “Likewise there is a good chance they will have cancelled all if not most of their Boeing orders too. Airbus and Boeing both got suckered into the heady visions of DAE - but their saving grace is that it's a strong buyers market today so lost orders now means greater slot availability for other customers looking for more fuel efficient airplanes.”

  There has been speculation over the whole future of DAE since Dubai’s well-respected head of civil aviation and Emirates airline, Sheikh Ahmed bin Saeed al Maktoum stepped down as chairman of the company last year.

It was created in 2006 as a collaboration between several Dubai names including sovereign wealth arm Investment Corporation of Dubai, developer Emaar and state-linked DIFC Investments. The companies were hit badly by the world financial crisis which affected Dubai more than any other Arab state.

Khuram Maqsood, former director at a Dubai investment fund was reported by news agency Reuters as commenting "The shareholders in DAE are government entities and each of them own at minor stake. So there is not a single entity that is championing for DAE and this may be a reason why it is marginalised."

More than 60 key staff in the organisation are seaid to have left over the past quarter.

Chief executive Genise stepped down on June 30 after four years at the helm l. In a statement Khalifa Al Daboos, the DAE managing director said: "We will take this opportunity to consolidate the management of this business in Dubai," said. "The business will report to the chief operating officer and will be managed in a more integrated manner with the rest of DAE."

Mr Genise is leaving because he "wanted to be involved in a more entrepreneurial venture", the statement said.