UAE airlines’ profits may decline this year: IATA

In this May 4, 2014 file photo, an Etihad Airways plane prepares to land in Abu Dhabi Airport, United Arab Emirates. (AP)
Updated 15 March 2017

UAE airlines’ profits may decline this year: IATA

ABU DHABI: The profitability of airlines based in the UAE, the Middle East’s main aviation hub, is likely to fall this year amid limited growth in demand, the head of the International Air Transport Association (IATA) said on Tuesday.
“The UAE carriers will have a year that is probably below 2016,” Alexandre de Juniac, director-general and chief executive of the IATA, told reporters in Abu Dhabi.
Low-cost carriers that offer long-haul services, as seen in Europe, could also soon start to take hold in the region, he said.
IATA said in December that Middle East airlines are likely to see profits fall to $300 million in 2017 from $900 million last year in part due to high capacity and limited demand growth, but did not give specifics on UAE carriers at that time.
Half-year profit fell 75 percent at Emirates and Tim Clark, the airline’s president, said last week that while yield declines had halted it was still a tough year.
Air Arabia and flydubai reported lower full-year profit for 2016, while Etihad has not yet reported its results but has said it is reviewing its business.
Airlines in the Gulf benefited for years from high oil prices that spurred government spending and regional growth. But demand has softened and travel budgets have tightened after more than two years of depressed oil prices, exposure to weaker markets and currency fluctuations.
Emirates and Etihad are both reviewing their workforces, while Emirates has agreed with Airbus to delay the delivery of 12 A380 jets over the next two years.
Both airlines have hundreds of aircraft on order from Airbus and Boeing and neither has signaled further delays to deliveries.
De Juniac told Reuters that airlines across the world need to “manage their assets cleverly.”
“There is a lot of capacity so it explains why the yield is declining and many companies are suffering,” he said, but added that he “would not advise” airlines on how to define their capacity.
The growth of low cost airlines that fly long haul, like Norwegian Air Shuttle, is expected to continue to pressure established transatlantic carriers as these newcomers expand using longer-range single-aisle aircraft to fly between smaller, cheaper local airports.
Growth of low cost, long haul is “starting to accelerate” in Europe and Asia and is likely to eventually develop in other markets such as the Middle East, de Juniac said.


10 things you need to know on Tadawul today

Updated 2 min 37 sec ago

10 things you need to know on Tadawul today

Here are a few things you need to know as Saudi stocks start trading on Wednesday.

1) Saudi Aramco customers are unaffected by the terrorist attack at a petroleum products distribution plant in the north of Jeddah, a company official said.

2) The Saudi Arabian Monetary Authority (SAMA) imposed penalties on 30 financial institutions due to violations of “responsible finance principles” for individuals.

3) Saudi Arabian Amiantit Co. signed two agreements to sell its stakes in Moroccan units, generating an accounting profit of SAR 14.16 million ($3.89 million).

4) Saudi Arabia moved beyond the concept of relative food security to achieve self-sufficiency in many sectors such as milk and poultry, according to Almarai Co.’s vice president of corporate affairs Faisal Marzouq Al-Fahadi.

5) Al-Khaleej Training and Education Co. signed a binding 30-day memorandum of understanding with the shareholders of Al-Raqi National Schools Co. to acquire 60% of the latter at SAR 12.82 million.

6) Saudi Reinsurance Company (Saudi Re) signed reinsurance contracts with Probitas Corporate Capital Ltd. with estimated gross written premiums of SAR 177 million.

7) Sadara Basic Services Co. said its parent company, Sadara Chemical Co. (Sadara), met the conditions specified by lenders under the Sadara project financing documents to achieve the project completion date.

8) Abdullah Al Othaim Markets Co. announced the opening of a new store in Al-Kharj, bringing the total number of branches across Saudi Arabia to 248.

9) Arabian Pipes Co. shareholders approved amending some of the company’s bylaws during the extraordinary general meeting.

10) Oil prices rose on Wednesday morning. Brent crude edged up 62 cents to $48.48/bbl, while WTI crude gained 52 cents to $45.43/bbl.

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