News from the international airshow circuit can be revealing and deceiving in equal measure. Two years ago, the
2007 Dubai Airshow generated a record-breaking $155 billion in orders. This year’s Dubai Airshow, held November 15 to 19, saw just $14 billion in new business announced. And then, less than a week after the show closed, world stock markets shuddered at the news that Dubai World–the government-backed holding company behind many high-profile property developments in Dubai–had told creditors and bond holders that it cannot honor repayment commitments, some of which fall due in December. Dubai World owes $59 billion–the lion’s share of Dubai’s total debt of $80 billion–and it now says that it must unilaterally defer repayment of $35 billion for at least six months. So Dubai’s entire state debt amounts to just more than half the value of orders placed in just five days at its 2007 airshow.

So severe has been the blow to Dubai’s credibility on global financial markets that some analysts have even suggested that Dubai will have to relinquish control of flagcarrier Emirates Airline to its neighboring emirate, Abu Dhabi, as part of a possible deal to ease its debt crisis. The Dubai government, which owns Emirates, has not commented on the proposition, but there is no doubt that the airline–by complete contrast with Dubai World’s apparently ill-conceived real-estate speculation–remains a very viable asset and so, theoretically, a credible piece of collateral against which to restructure Dubai’s debts. Two weeks ahead of the latest Dubai Airshow, Emirates announced results for the first-half of the current financial year that showed a 165-percent increase in net profits to Dhs732 million ($205 million) and 18-percent growth in passenger traffic.