Emirates has cited Delta Airlines (NYSE:DAL) as one of three US based airlines that have received billions in subsidies.
The Abu Dhabi based airline was reacting to similar unfair competition accusations it faced in a 55 page report published last February by Delta, American Airlines and United accusing it and other Persian Gulf based carriers (Emirates, Qatar Airways and Etihad) of receiving some US$42 billion in subsidies since 2004.
Etihad alone is said to have benefited the most at US$17 billion.
An Emirates commissioned report says that the three major airlines in United States have received 71.48 billion in benefits from the US government since 2000.
Indeed, the aid was essentially intended to break the deadlock facing the three companies, which were close to closing down in early 2000 only to face the post 9/11 shock.
Under the blanket of Chapter 11 of US bankruptcy law, United got US$44 billion, Delta US$15 billion and American Airlines US$12 billion. These "benefits" were notably in the form of debt relief.
The Emirates sponsored report prepared by London based Risk Advisory Group claims that the subsidies allowed the US airlines to climb from imminent bankruptcy to matching current industry leaders, “each of them recording several billions of US dollars in profits."
American, Delta and United have thus generated in 2014 collective net profits of US$8.97 billion, which represents some 45% of the total of US$19.9 billion in profit recorded by the entire airline industry in 2014.
Emirates claims that this trend is continuing unabated in 2015, as proven by all three major US companies having announced substantial net profits for the first quarter.
For its part, Etihad Airways has always rejected complaints from Delta Air Lines, United Airlines and American Airlines that it received subsidies, publicly stating that what funds it did get were in the form of equity and loans from its sole shareholder the government of Abu Dhabi, the largest emirate in the United Arab Emirates.
Emirates then would not be surprised that Delta Airlines gained 3.6% on NASDAQ after it announced a plan to distribute additional six billion dollars to shareholders by 2017, through stock buybacks and higher dividends on Wednesday.
The Board of Directors has authorized a US$5 billion share repurchase program to be completed no later than the end of 2017 to succeed from the current program for which the group can still spend 725 million until end of June.
In addition, the Board decided to make a 50% increase in its quarterly dividend per share, bringing it to 13.5 cents, effective from the quarter ending in late September.
Valid or not, Emirates accusations failed to mention that Delta still had an adjusted net debt of US$7.4 billion at end-March 2015, which the airline aims to reduce to US$4 billion by the end of 2017.