Impact of subsidy cuts to be limited

Updated 19 April 2016
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Impact of subsidy cuts to be limited

JEDDAH: Saudi Arabia is set to limit the impact of subsidy cuts on citizens as it prepares to implement an economic vision for the future, Deputy Crown Prince Mohammed bin Salman told Bloomberg in an interview on Monday.
The proposed system being developed by the Saudi government would provide cash to low and middle income Saudis who rely on subsidies, he said.
“We don’t want to change the life of the average Saudi… We want to exert pressure on wealthy people, those who use resources extensively,” he said at King Salman’s private farm in Diriyah.
Under the previous system, 70 percent of the subsidies benefited high income people, Bloomberg cited the deputy crown prince as saying.
The prince explained — using electricity prices as an example — how cash handouts can lead to reduced consumption.
“Let’s say the international price for electricity is 1,000 riyals and you only pay 50, we will give you the 1,000 riyals and increase the price of electricity … You will have two options: You either spend the 1,000 on electricity bills like you used to, or you can lower your electricity consumption and use it on something else.”
He said that a recently imposed water tariff, which saw a surge in complaints among citizens, was applied in an “unsatisfactory” way and that will be rectified.
“Honestly speaking, what happened wasn’t in accordance with the plan that we’ve approved,” he said.
“Now, we are working diligently on reforms within the water ministry so that things will be in accordance with the agreed plan,” he added.


Lufthansa announces overhaul of budget carrier Eurowings

Updated 24 June 2019
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Lufthansa announces overhaul of budget carrier Eurowings

  • Lufthansa cited falling revenues at Eurowings as a major reason for its warning on full-year profits on June 16
  • Eurowings’ long-haul business would be managed by Lufthansa in the future

BERLIN: Lufthansa on Monday announced a turnaround plan for Eurowings in which the budget carrier will focus on short-haul flights and seek a 15 percent cut in costs by 2022 in the hope of returning to profit.
The German airline cited falling revenues at Eurowings as a major reason for its warning on full-year profits on June 16. Eurowings’ revenue was also forecast to fall sharply in the second quarter.
Lufthansa said its Eurowings fleet would be standardized on the Airbus A320 family and it would seek to boost productivity at Eurowings by limiting itself in Germany to one air operator’s certificate.
Brussels Airlines — the Belgian national flag carrier which Lufthansa took control of in 2016 — would not be integrated into Eurowings, Lufthansa said. A turnaround plan for Brussels Airlines will be announced in the third quarter.
Lufthansa also said it would start pegging its dividend payout ratio to net profit in the future to give the group more flexibility. It would pay out a regular dividend of 20 percent-40 percent of net profit, adjusted for one-off gains and losses.
Lufthansa said Eurowings’ long-haul business would be managed by Lufthansa in the future.
Carsten Spohr, Chief Executive Officer of Lufthansa, said Monday’s announcements sent “a clear signal that this company cares about its shareholders and tries to create value for them.”
Lufthansa said its Network Airlines — made up of Lufthansa, Swiss and Austrian Airlines — would aim to use innovations in sales and distribution to make a contribution to increasing unit revenues by 3 percent by 2022.
Network Airlines will aim to reduce unit costs continuously by 1 to 2 percent annually, the airline said.