Saudi budget carrier flyadeal to pick Airbus or Boeing jets by end of month

Flyadeal currently operates a fleet of eight leased Airbus A320ceos. (Courtesy flyadeal Facebook)
Updated 14 November 2018
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Saudi budget carrier flyadeal to pick Airbus or Boeing jets by end of month

DUBAI: Saudi Arabian budget airline flyadeal aims to decide whether to order Airbus or Boeing narrow-body jets by the end of this month, its chief executive said on Wednesday.
Flyadeal, a subsidiary of state-owned Saudi Arabian Airlines, had been due to decide on the order for 30 Airbus A320neos or Boeing 737 MAXs in the second quarter but held off to further assess the performance of the revamped models.
“We want some evidence because we’re committing a huge chunk of capital,” Con Korfiatis told Reuters at a Dubai conference, adding that the planemakers had competed “very vigorously.”
Flyadeal is a pure low-cost airline, with passengers charged for meals and checked luggage, a model that has so far not had major success in the Middle East beyond UAE-headquartered Air Arabia.
The order for the planes, which are the latest versions of world’s most used jets and typically employed for short to medium haul flights, would be worth more than $3 billion at current list prices, although industry sources say discounts of around 50 percent are common on such large orders.
Although the world’s two largest planemakers say they are mostly sold out of the jets until 2024, the order will give flyadeal a pipeline allowing it to plan for long-term growth.
The airline, which plans to add around 10 aircraft a year to its fleet from 2020, will next year start leasing the model of jet it orders until it receives its first aircraft from the production line, Korfiatis said.
Flyadeal operates a fleet of eight leased Airbus A320ceos and will add another three by early January 2019, allowing it to expand from 10 to 14 domestic destinations.
The airline, which launched in September 2017, has carried more than 2 million passengers so far and expects to carry more than 3.5 million in 2019, Korfiatis said.
It is also planning to launch its first international flight next year which will likely be to Egypt, Turkey, or to other Gulf Arab countries.


Dubai real estate market recovery to be seen as of 2022: S&P

Updated 20 February 2019
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Dubai real estate market recovery to be seen as of 2022: S&P

  • The outlook on property was part of a challenging assessment of the credit-worthiness of the emirate
  • S&P was generally comfortable with the credit ratings of the emirate’s banking system

DUBAI: S&P Global, the ratings agency, painted a grim picture for the real estate sector in Dubai, with a meaningful recovery in property prices expected only after 2022.
At a presentation to journalists in the Dubai International Financial Center, S&P analyst Sapna Jagtiani said that under the firm’s “base case scenario,” the Dubai real estate market would fall by between 5 and 10 percent this year, roughly the same as the fall in 2018, which would bring property prices to the levels seen at the bottom of the last cycle in 2010, in the aftermath of the global financial crisis.
“On the real estate side we continue to have a very grim view of the market. While we expect prices to broadly stabilize in 2020, we don’t see a meaningful recovery in 2021. Relative to the previous recovery cycle, we believe it will take longer time for prices to display a meaningful recovery,” she said.
S&P’s verdict adds to several recent pessimistic assessments of the Dubai real estate market. Jagtiani said that conditions in the other big UAE property market, in Abu Dhabi, were not as negative, because “Abu Dhabi never did ramp up as much in 2014 and 2015 as Dubai.” S&P does not rate developers in the capital.
She added that a “stress scenario” could arise if government and royal family related developers — such as Emaar Properties, Meraas, Dubai Properties and Nakheel — which have attractive land banks and economies of scale, continue to launch new developments.
“In such a scenario, we think residential real estate prices could decline by 10-15 percent in 2019 and a further 5-10 percent in 2020. In this case, we expect no upside for Dubai residential real estate prices in 2021, as we expect it will take a while for the market to absorb oversupply,” she said.
S&P recently downgraded Damac, one of the biggest Dubai-based developers, to BB- rating, on weak market prospects.
However, Jagtiani said that, despite the “significant oversupply” from existing projects, several factors should held stabilize the market: Few, if any, major product launches; improved affordability and “bargain hunting” by bulk buyers; and a resurgence of Asian, especially Chinese, investor interest in the market.
Jagtiani also said that government measures such as new ownership and visa regulations and reduction in government fees could help prevent prices falling more sharply, as well as “increased economic activity related to Dubai Expo 2020, which is expected to attract about 25 million visitors to the emirate.”
The outlook on property was part of a challenging assessment of the credit-worthiness of the emirate. “In our view, credit conditions deteriorated in Dubai in 2018, reducing the government’s ability to provide extraordinary financial support to its government related entities (GREs) if needed,” S&P said in a report. “The negative outlook on Dubai Electricity and Water
Authority (DEWA) partly reflects our concern that a real estate downturn beyond our base case could out increased pressure on government finances,” the report said.
It pointed out that about 70 percent of government revenues come from non-tax sources, including land transfer and mortgage registration fees, as well as charges for housing and municipality liabilities, as well as dividends from real estate developers it controls, like Emaar and Nakheel.
S&P was generally comfortable with the credit ratings of the emirate’s banking system, which has an estimated 20 percent exposure to real estate. “Banks in the UAE tend to generally display a good level of profitability and capitalization, giving them a good margin to absorb a moderate increase in risks,” the report said.