Marooned said ''In an area where loss of face counts for so much the fact that AUH has said enough is enough is remarkable. It will not bail DXB out at any cost but only on it's terms''
Absolutely, makes you wonder whats in the offing. There is tremendous inter arab dispute in the GCC already.
The Saudis had recently declarded Riyadh as the HQ for a regional Monetary union, to which the AUH govt reacted angrily by pulling out of the monetary union. Can you imagine the state of a UAE currency unpegged to the dollar after this default by Dxb, moodys have downgraded almost all of the Dubai Inc co to BBB-, one grade short of junk.
More interestingly what does AUH have in mind, even if Sheikh Mo and family retire to good ol'England where they have their estates in Newmarket and Windsor along with substantial real estate in Canary Wharf. Does it make sense for AUH to buy all these loss making assets. And as you rightly hinted AUH is far more conservative than Dxb and to attract investors into these garishly extravagant projects of Dxb they will have to dilute their principals i.e Let the worlds flesh trade Mafia (Triads, russians, viets, Dawood et al) in to get the punters.
In short lend your money and dilute your vision.
The EK business model had one objective and survived on a fundemental business fact. The objective was to direct traffic to Dxb as a stopover dest. The fundamental business fact being the whole venture was subsidised by the traffic from the sub-continent (as the T^&£$ in India-Pak can't get their act together), which paid a premium due lack of competition. EY does not need to embrace EK or Takeover, it will die a natural death. Surely some of these downgrading will rub off EK (Shk Ahmed has been doing the round of Lon with Mo, surely the market won't ignore this umbical bond), where suppliers would demand clearance of outstanding payments, if long due. In hindsight Airbus and Boeing might find that they have been wrong on betting on EK-DXB to be a responsible team like SQ-SIN. And in the long run the collapse of EK would be healthy for global aviation. With this default Dxb has lost its USP. Iceland, Macedonia and Georgia have a greater chance of turning into a Financial centre as compared to Dxb.
AUH might pick up the distressed assets, reduce their cost base in a depressed jobs market and propell AUH as the more sound Islamic financial centre cum family holiday destination.
They will let Sh Mo and sons to mop up the damage for generations to come.