10 of theil giant, subsidiary could be sold off. Tracy alloway spoke exclusively to the ceo and asked for more details about the plan geared the plan. At least 10 . Higher, go a little that will depend on how the market is over the next few weeks. Tracy is there particular valuation you are targeting . Not really. [indiscernible] a oneofakind ipo in the region. Ist we are trying to achieve a way to ensure an unprecedented [indiscernible] market and domestic and local investors to work alongside. Tracy there are of course rumors you might look to float other businesses. What else might be in the pipeline . Were looking for ways to maximize value to shareholders while keeping it wholly owned. Having said that, we are looking at exploring the whole value chain with the main focus being on service systems. Tracy you keep rolling out a listing at the Holding Company level, you did it earlier today during your speech. Why is that . You have a neighbor across the border that is listing at the Holding Company level. Simply because we have had some incidents in the past where people have thought we were not that we were insinuating we would not be in the market, which is incorrect. What we are exploring is subsidiaries that are whollyowned. Tracy could you get some Strategic Investors in cornerstones for the listing of the Distribution System . Absolutely, they would bring value. They would help us grow. Tracy the other thing i want to ask about is the partnership profits, how are the discussions with potential partners going, and who would be your ideal partner . The criteria is simple, we have a very sound track record. The samepplied methodology, we look for partners fishing the same values and same vision who are looking at the market in a positive manner. That would bring value and access to technology in the markets and help us grow in a smarter way as well as provide a platform to upscale our confidence. Tracy you mentioned financing. You did just sell your first bond. That is a huge departure for adnoc, is that a tough sell . Really understand why you are capping the bond market . It is a signal that had a positive Ripple Effect on the domestic market. [indiscernible] are willing towe go as far as transformation is concerned. It had a positive impact. Yousef still to come, a boost for boeing. To eized off airbus order from an airbus. Yousef welcome back to best of Bloomberg Markets middle east. There was some skyhigh drama at the dubai air show this week. Airbus had it been expecting to size a deal a deal with emirates, but at the last minute, the carrier went with boeing instead, ordering 15 billion worth of its dreamliner spirit i spoke with dreamliners. Emirates ceo. He its an aircraft fairly late in its development. We always as for something along the lines. In our view, over the shorter range it is perhaps better it has perhaps better economics. Thatll be an airplane appears in our fleet in 2022. 7779s also be receiving and 7778. It becomes a complementary fit to the fleet. With the new planes, could you be looking at new destinations, looking at perhaps hiring more aggressively to service what you can see as new pockets of demand . This aircraft will be an enormous asset to us on existing routes, it allows us to open routes perhaps were a little bit compromised with the size of aircraft we have today. We can then institute far more cities. You are right, we see this as a gross vehicle as well as a vehicle that better suits the demand as it would be today and the way we forecasted. Youru recently celebrated hundred eight 380 one will happen to the older ones . Talk us through your thinking. Had 100, it was part of an order for 142. The aircraft is usually it carriesfor us, our brand. We have done a great things and we will continue to innovate those. Remains a constant for us. In my view, as we go forward, the airline has capacity to take more of those on. Model is a contentious one, we have seen a lot of airlines, especially in china and india, ordering smaller aircraft for pointtopoint. It is interesting. When we started the airline and we started what we call the , wennings of a megahub were kicking off what we would call second and third and fourth level cities. They said they would never work and we must concentrate on the hub. What people are now doing, i am not boasting they are now realizing there is a lot of demand going direct between third and fourth level cities. That is not to say the hub or super hubs day is over, its more about that or distribution of traffic flows served by a better type of aircraft, that is true. The what the Airline Community was using in the 1980s and 1990s did and 1990s. It also presupposes that if the hub doesnt work its because there is not growth. Difficulties,r geopolitical, economic, whatever, but in the end, things will come back. Already cargo is in double digits and passenger is picking up quite rapidly. Yousef still with the air show, the ceo of the brazilian aircraft maker said he is bullish on the middle east and hiring more staff globally on unexpected expected boost in orders. Here is my interview with john slattery. It is a very big region for us. Aircraft roughly 350 20this region over the next years. We are very focused. We have a big delegation here, not only from commercial airing commercial aviation, but defense, we have aircraft and mockups, we are delighted to be here. Hasef the company described the upcoming year as a transition year. Quite a few challenges you are dealing with. What kind of cost savings are you looking at to help boost the margins a little bit . Lets stay with the transition first. Next year is the end of service of e2. We are on time, on schedule and on budget for the e2. Typical for any oem to have a transition when you enter into service anywhere. It will have an impact on results next year, there is a slight dip next year, but when you talk about what were doing on the bottom line to improve margins, we are focused on what we call the passion for excellence. We have a focus across the board on improving efficiency. Thats not just costcutting, but in every facet of the organization to improve efficiency and get margins back in the nearterm to mediumterm to low double digits, high single digits. Weve seen an interesting move from airbus in terms of getting involved with see fairies. Had he responded that . How do you respond to that . Onits an interesting move the cseries. They have said it is not a marriage yet, theyll have to go through antitrust immunity. They will go through that process over the next 612 month, however long it takes. It puts a spotlight on the 100, 150 seat segment. I think we will be a beneficiary of that as more and more airlines get on operating jewel fleas. Involved, nowget that the antitrust process has started, they cannot get involved until immunity is granted and the joint venture is approved probably later next year. Until then, we continue to raise the profile of the concept ourselves. Yousef it does make the market for the e2 more challenging. Is it worth a thought to team up with boeing . I think it makes the market for the e2 better. The reason i say that is we now have the Marketing Team of airbus raising the profile of a concept of dual fleets with their Customer Base around the world. Airbus enjoys their Marketing Team, when they start to marketing next year, they will raise the concept of operating dual fleets to the Customer Base. I am hiring more sales people, more marketing people around the world right now because we expect more activity in our space over the next few months. Yousef you put in a complaint for cseries subsidies. Will you continue pushing for that . We are absolutely focused and committed to supporting the brazilian government in their mission at the wto, and the panels that have been opened. We are focused on that and the ombardierombard ea b to potentially produce aircraft and North Carolina north america, that does not take away from the fact that subsidies were taken to keep the program alive. And we are very focused on flashing that out. Next, long live the bromance feared the global head of Commodities Research at citigroup says the oil output got thrashed by saudi arabia and russia must continue. We discuss that next. This is bloomberg. Yousef welcome back to best of Bloomberg Markets middle east. While prices will collapse if producers failed to extend supply cuts, that is according to the global head of Commodities Research at citigroup. Characterized the relationship between saudi arabia and russia as a bromance and said that anything other than decisive moves could trigger difficulties. Production much of a cut was needed. A ninemonth extension, anything shorter could be [indiscernible] of prices on the 13th november. I think taking a step back and putting it in the context, some of the Oil Market Fundamentals have been a driving all markets in prices sharply in the last few weeks. Adding onto that the geopolitical factors and reasing optimism that opec will take place in some form or fashion. Note from just got an the iea, they said the longterm forecast for crude oil has been slashed by 18 . They are saying that there will be a boom in the u. S. Sale story. Would you agree with this kind of bullish outlook . We are very bullish on the shale story. Engineers will continue to find pioneering ways to extract shale and Lower Oil Prices over time. Cant facing if you beat them, you have to learn to live with them. I think the shale story is one that will be overtime. David this is david in hong kong. Foril price price perfection . From our view, 65, ing in between 40 to the sense that a soft feeling of the levels were the markets are at the moment, shall producers will become more could to havewe oversupply again and will bring the price back down to levels of around, anything around 50 or potentially below. We have looked at our models in terms of corridors between 40 and 65 of the current juncture. Yousef the bullishness we have also seen from hedge funds at record levels is also coming from the geopolitics and the nervousness in this part of the world, especially around the Iransaudi Arabia rivalry. We put on a chart what has been happening, take a look at this. 5114. This was crafted hours ago. Looking at abu dhabi credit default swaps. Saudi, as well. Key points, beginning of the month, november, major spike for these default these credit default swaps. How worried are you that this will go to a level where we could be looking at military options . I think military options are very slim, in our opinion. I think it will still be played out in proxy wars in human and so on. In yemen and so on. Given the large level of steps, ofy about next course from saudi arabia, what will be the next steps . We heard from the attorney general this is stage one of the operations youd operations. We can expect more guidance and predict ability about next steps. Maybe investors will take more comfort in terms of their level of risk in the markets. With the energy seen, the Egyptian Oil Minister told us his country will stop importing liquefied natural gas in 2018 and may eventually be exporting natural gas after it from giantucing fields off of the countrys mediterranean coast. It means a lot of things. First of all, it means good betweenlling the gap consumption and production. Number two, and it is also important that this is a big discovery, and this means that we are now getting through new horizons and new potential discoveries. So potentially, we might find some other resource. Aller three, is showing to multinationals and i have sees doand ifcs that we can extremely well when we are talking about giant discoveries, to be developed and come into the stream to be competitive in a short period of time. What interest are using from International Oil companies . It seems like some countries are cutting back a little bit at a time of low prices, including. Irgas their gas what we have seen lately, and i would have to take again the example, when we stopped the development of the seed the feed. We were joined by bp and others. This meant interest. Potential newcomers. Coming for the first time in the oil and gas industry in egypt. This shows international desire, and appetite to come. We are to have our main and important strategic players in egypt. Also a, newcomers are success for egyptian oil and gas. The trust and confidence they have seen in the system. Any potential newcomers we dont know about yet . For the time being, no, but we are not stopping from trying to attract more newcomers and new iocs. We want to have our plateful of big and important players. Saying, we consider a , our investment not only offshore egypt but in the eastern mediterranean. Area and qualify the egypt to have potential new comers and iocs. Yousef regional tensions shifted up again this year as bahrain accused iran of sabotaging an oil pipeline. Is this a phone . Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. Theef welcome back to best of Bloomberg Markets middle east. The week began with behrain sabotaging anof oil pipeline. It comes after riyadh accused iran of being involved in missile launches by yemeni rebels. From oure on this guests. There has been a real buildup, sort of another piece that is coming in, you know you have initially the reagan the resignation of the lebanese prime minister, the rockets coming in from yemen. The rhetoric. You get the sense there is a ramping up of tension of rhetoric that could lead to something, nobody is quite clear exactly what it is leading to. In lebanon, there is a lot of nervousness, a lot of questioning what exactly is going on. Sean paul, lets get you into the conversation. What is the next level of excavation . In the past of escalation . Seen ast, we have not could we see more proxy conflicts . Weve not seen a direct confrontation and i dont think one is likely in the near term. Tensions have escalated. There is confrontation around the region. The petition going on in iraq and syria and possibly lebanon, as well. I think the broader story from all of this is that Political Risk is on the rise across the gcc and the middle east, and while investors in the middle east are used to some level of Political Risk, theyre not nationally not necessarily used to the risk emanating from the gcc. Traditionally when we see Political Risks rising, you see investors back away from those markets, but in the case of saudi arabia, this anticorruption crackdown is sort of being pitched as an indication that reform is coming, it will make it easier for reform to happen. That is the positive story that has been spun for some investors. If you look at the chart behind me, you can see Foreign Ownership of saudi stocks has been trending down recently. Basis, is this good or bad for Foreign Investment in the market . In the longterm, definitely a positive. If everything that happens from here on out goes in the right direction. Clicking down on corruption is a positive for any emerging market, it clapping down on corruption is not just about arresting people, it is about the rule of law, due process. As far as we know much hundred individuals have been arrested, we dont know the names of the individuals or the specific crimes, what they are alleged to have committed. If you also look at the industries involved, government, aviation, media, construction. It is wideranging. It shows it is not an isolated case but highlights a structural deficiency within the institutions. I want to bring you back in on the notion of Foreign Investors potentially leaving saudi. What are we expecting in terms of outlook outflows from the market and are we expecting action from the Saudi Authority . Theres a lot of nervousness in the saudi wealthy right now. They are nervous about being seen to try and shift money out of saudi arabia. They might be tempted, but they might be saying it, i dont want to come into the crosshairs of this. What we are hearing is that a lot of them are looking at their investments, the more liquid assets they have overseas and in the gulf in particular and trying to shift out of the gulf countries, fearing there will be requests from the saudi central bank, from the saudis to the uae, to the other countries to free some of those assets. Youre seeing a lot of calls to Fund Managers saying, help me out here, how can i get the money out . Insef what is the next step terms of Saudi Foreign policy in the situation as it stands in lebanon . We dont quite understand where the lebanese prime minister, who . Esigned this is bloomberg. He met the Russian Ambassador , he is also traveled to the uae, meeting the crown prince of the uae. He seems to be out and about innocence in the sense of saudi arabia and allies, but he is not in lebanon. Resigneduestion is, he in saudi arabia, why arent you coming back . Accusationsg to from some lebanese parties that he is being held against his will. The issue is that the uncertainty, which is what investors usually hate, the uncertainty is that nobody really understands what the next step is, what is going to happen , or what the demands are. Saudi arabia is basically trying to draw a line in the sand against iranian influence, but what other steps will it take to concretely achieve that . Yousef coming up, the need for speed. We speak to the ceo of a company hoping to bring supersonic Passenger Air travel back. This is bloomberg. Yousef welcome back to the best of Bloomberg Markets middle east. Lets get back to the dubai airshow where i spo