UAE regulator not optimistic on Boeing 737 MAX return this year

UAE’s budget carrier flydubai is one of the largest Boeing 737 MAX aircraft customers, having ordered 250 of the fast-selling narrow-body jets. (Courtesy Boeing)
Updated 15 September 2019

UAE regulator not optimistic on Boeing 737 MAX return this year

  • The 737 MAX has been grounded since March while Boeing updates flight control software
  • UAE airline flydubai is one of the largest MAX customers

DUBAI: The head of the United Arab Emirates’ General Civil Aviation Authority said on Sunday he was not optimistic that the Boeing 737 MAX would return to operations this year and that the first quarter of 2020 was more likely.
The 737 MAX has been grounded since March while Boeing updates flight control software at the center of two fatal crashes in Indonesia and Ethiopia that together killed 346 people within a span of five months.
Boeing is targeting regulatory approval for the fixes in October, though the US Federal Aviation Administration has said it does not have a firm time for the aircraft to be flying again.
The GCAA will conduct its own assessment to allow the MAX to return to UAE airspace, rather than follow the FAA, Director General Said Mohammed Al-Suwaidi told reporters in Dubai.
He said the GCAA would look at the FAA decision and that the UAE regulator had so far not seen details of Boeing’s fixes.
The FAA has traditionally taken the lead on certifying Boeing jets, though other regulators have indicated they would conduct their own analysis.
UAE airline flydubai is one of the largest MAX customers, having ordered 250 of the fast-selling narrow-body jets.
It has not said when it expects the aircraft to be operational again. American Airlines has canceled flights through Dec. 3, United Airlines until Dec. 19 and Southwest Airlines Co. into early January.


Oil-rich wealth funds seen shedding up to $225 billion in stocks

Updated 30 March 2020

Oil-rich wealth funds seen shedding up to $225 billion in stocks

  • Risking more losses is not an option for some funds from oil-producing nations

LONDON: Sovereign wealth funds from oil-producing countries mainly in the Middle East and Africa are on course to dump up to $225 billion in equities, a senior banker estimates, as plummeting oil prices and the coronavirus pandemic hit state finances.

The rapid spread of the virus has ravaged the global economy, sending markets into a tailspin and costing both oil and non-oil based sovereign wealth funds around $1 trillion in equity losses, according to JPMorgan strategist Nikolaos Panigirtzoglou.

His estimates are based on data from sovereign wealth funds and figures from the Sovereign Wealth Fund Institute, a research group.

Sticking with equity investments and risking more losses is not an option for some funds from oil-producing nations. Their governments are facing a financial double-whammy — falling revenues due to the spiraling oil price and rocketing spending as administrations rush out emergency budgets.

Around $100-$150 billion in stocks have likely been offloaded by oil-producer sovereign wealth funds, excluding Norway’s fund, in recent weeks, Panigirtzoglou said, and a further $50-$75 billion will likely be sold in the coming months.

“It makes sense for sovereign funds to frontload their selling, as you don’t want to be selling your assets at a later stage when it is more likely to have distressed valuations,” he said.

Most oil-based funds are required to keep substantial cash-buffers in place in case a collapse in oil prices triggers a request from the government for funding.

A source at an oil-based sovereign fund said it had been gradually raising its liquidity position since oil prices began drifting lower from their most recent peak above $70 a barrel in October 2018.

In addition to the cash reserves, additional liquidity was typically drawn firstly from short-term money market instruments like treasury bills and then from passively invested equity as a last resort, the source said.

It’s generally a similar trend for other funds.

“Our investor flows broadly show more resilience than market pricing would suggest,” said Elliot Hentov, head of policy research at State Street Global Advisers. “There has been a shift toward cash since the crisis started, but it’s not a panic move but rather gradual.”

The sovereign fund source said the fund had made adjustments to its actively managed equity investments due to the market rout, both to stem losses and position for the recovery, when it comes.

Exactly how much sovereign wealth funds invest and with whom remain undisclosed. Many don’t even report the value of the assets they manage.

On Thursday, the Norwegian sovereign wealth fund said it had lost $124 billion so far this year as equity markets sunk but its outgoing CEO Yngve Slyngstad said it would, at some point, start buying stocks to get its portfolio back to its target equity allocation of 70 percent from 65 percent currently.

Slyngstad also said that any fiscal spending by the government this year would be financed by selling bonds in its portfolio.