Istithmar World Aviation Executive Jets closed after debt restructuring announcement citing "commercial reasons".
Dubai World executive jet business shuts down
A subsidiary of Dubai World has shut down its executive jet management business, citing "commercial reasons", in fresh evidence of belt tightening at the group as it seeks to restructure operations and postpone debt repayments. Istithmar World Aviation Executive Jets, part of Dubai World's investment arm Istithmar World, closed its doors in December, a month after the parent company Dubai World announced a major debt restructuring.
"For commercial reasons, Istithmar World decided last year to wind down its corporate jet management operation under Istithmar World Aviation. This decision has no impact on Istithmar World's asset base," a representative for the company said yesterday. Istithmar World Aviation originally began as Nakheel Aviation, which managed the business jets for the property company behind such coastal developments in Dubai as the Palm Jumeirah and The World.
Although it has shut its executive jets management business, Istithmar World Aviation's other investments include stakes in Dubai Aerospace Enterprise, an aviation investment firm whose holdings include aviation engineering and maintenance firms in the US, and Daallo Airlines, a carrier based in Dubai and serving Djibouti, Kenya, Ethiopia and Somalia. By 2007, the company said it had built up its staff to 60 people and planned to spend US$50 million (Dh183.6m) developing its business into a major regional provider of business jets for charter and management of privately owned aircraft.
It planned to build two aircraft hangars encompassing 170,000 square feet at Al Maktoum International, the new airport opening this year in Jebel Ali. The aviation unit is thought to have had about five aircraft under management, of which two or three are owned by Dubai World. Some aircraft are now being managed by Empire Aviation, a business jet operator based at Dubai International Airport, sources familiar with the matter said.
Officials from Empire Aviation declined to comment yesterday. Dubai World is engaged in a major restructuring in its diversified businesses as it seeks a debt standstill and restructuring with its creditors. Istithmar World recently sold the W New York Union Square hotel in a New York foreclosure sale. Last week, the company announced the resignation of its chief executive, David Jackson, under whose watch the company made some of its most high-profile investments, such as the purchase of Barneys New York, an upmarket retailer. The closure also comes at a time when business jet operators have been feeling the bite from the global economic downturn, with business down an average of 30 per cent last year.
"The slump in the market has affected us all, and all operators have lost aircraft," said Mike Berry, the managing director of the Dubai firm ExecuJet, which put in an unsuccessful bid to manage Istithmar World Aviation's aircraft. Ali al Naqbi, the founding chairman of the Middle East Business Aviation Association, said the market may finally be beginning to improve after a difficult time last year. "It is beginning to pick up," he said. "The last month of last year was very good, with good requests."