Pakistan eyes investment pacts with Saudi Arabia, UAE

The agreements come as Pakistan has sought to strengthen its public finances and reduce its current account deficit. (File/AFP)
Updated 10 January 2019
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Pakistan eyes investment pacts with Saudi Arabia, UAE

  • A memorandum of understanding was expected with Saudi Arabia this month
  • An investment framework accord is set to be signed with the UAE in February

ISLAMABAD: Pakistan expects to sign investment agreements with Saudi Arabia and the United Arab Emirates in the coming weeks, the prime minister’s office said, as Islamabad builds on its ties with states that have recently lent it billions of dollars.
A memorandum of understanding was expected with Saudi Arabia this month, with an investment framework accord set to be signed with the UAE in February, Prime Minister Imran Khan’s office said in a statement following a meeting on Wednesday.
The MoUs follow a similar agreement signed last month with China, it said.
The statement gave no details but the daily Dawn newspaper quoted Board of Investment Chairman Haroon Sharif, as saying the investments were likely to be in the oil refining, petrochemicals, renewable energy and mining sectors.
“We are expecting $10-billion-plus Saudi investments and the MoUs to be signed in this regard will not be common or vague but concrete agreements,” Dawn quoted him as saying, adding that Saudi Aramco would invest in an oil refinery and also set up its own refinery in Pakistan.
Sharif said the UAE was interested in agriculture and housing investments and four Malaysian firms were interested in investments in the areas of halal meat, gemstones, information technology and hi-tech education.
The investments would be in addition to a $6-billion package provided to Pakistan by Saudi Arabia and a similar-sized package, made up of loans and an oil payment credit facility, offered by the UAE.
The agreements come as Pakistan has sought to strengthen its public finances and reduce its current account deficit, which a report from the International Monetary Fund in November estimated to stand at 5.9 percent of gross domestic product in 2018.


Lufthansa profit warning spooks European airline sector

Updated 17 June 2019
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Lufthansa profit warning spooks European airline sector

  • Ryanair Chief Executive Michael O’Leary last month warned of the impact of what he called ‘attritional fare wars’

FRANKFURT: Germany’s Lufthansa sent shockwaves through the European airline sector on Monday as it cut its full-year profit forecast, with lower prices and higher fuel costs compounding the effect of losses at its budget subsidiary Eurowings.
The warning follows gloomy comments last month from Irish budget airline Ryanair, which vies with Lufthansa for top spot in Europe in terms of passengers carried. Air France-KLM also reported a widening quarterly loss last month.
In a statement issued late on Sunday, Lufthansa forecast annual EBIT of between €2 billion and €2.4 billion, down from the previously targeted €2.4 billion to €3 billion.
“Yields in the European short-haul market, in particular in the group’s home markets, Germany and Austria, are affected by sustained overcapacities caused by carriers willing to accept significant losses to expand their market share,” it said.
European airlines are locked in a battle for supremacy, with a surfeit of seats holding down revenues and higher fuel costs adding to the pressure. A number of smaller airlines have collapsed over the past two years.
Lufthansa cited falling revenue from its Eurowings budget business as a key reason for the profit warning.
“The group expects the European market to remain challenging at least for the remainder of 2019,” it said.
It also pointed to high jet fuel costs, which it said could exceed last year’s figure by €550 million, despite a recent fall in crude oil prices.
Ryanair Chief Executive Michael O’Leary last month warned of the impact of what he called “attritional fare wars” and said four or five European airlines were likely to emerge as the winners in the sector.
“No signs that anyone is prepared to reduce capacity, therefore we would anticipate the wave of consolidation in European short haul is not over,” said analyst Neil Wilson, analyst at London-based broker market.com.
Earlier this month global airlines slashed a widely watched industry profit forecast by 21 percent as an expanding trade war and higher oil prices compound worries about an overdue industry slowdown.
Lufthansa’s problems are centered on its European business, with a more positive outlook for its long-haul operations, especially on transatlantic and Asian routes.
Eurowings management is due to implement turnaround measures to be presented shortly, Lufthansa said, adding that efforts to reduce costs had so far been slower than expected.
Lufthansa’s adjusted margin for earnings before interest and tax (EBIT) was forecast between 5.5 percent and 6.5 percent, down from 6.5 percent to 8 percent previously, it said in a statement.
Lufthansa also said it would make a €340 million provision for in its first-half accounts, relating to a tax matter in Germany originating in the years between 2001 and 2005.