IATA calls on Middle East governments to help airlines

Governments should consider providing support to airlines to help them manage the impact of the coronavirus, the airline body IATA has said. (AFP)
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Updated 03 March 2020

IATA calls on Middle East governments to help airlines

ABU DHABI: Middle East governments should consider providing support to airlines to help them manage the impact of the coronavirus outbreak, which has led to a raft of flight cancelations, the industry’s largest global body said on Monday.

Global airlines have warned of the toll on their business as passenger numbers fall due to the outbreak that first emerged in China in late December and has since spread to more than 50 countries.

Airlines have stopped flights to Iran, where the virus is rapidly spreading, and Saudi Arabia has temporarily banned tourists from 25 countries that have recorded cases the virus.

“The region depends on air connectivity, and support from governments will really help the airlines to get through this difficult period,” the International Air Transport Association’s Vice President for Africa and the Middle East Muhammad Ali Albakri said.

Albakri said that IATA was not calling for state bailouts, but that governments could help airlines with their operating costs.

Governments control a number of costs incurred by airlines, such as taxes and landing and overflight fees.

Most Middle East airlines are state-owned. In the past major Gulf carriers have come under scrutiny over allegations they
unfairly benefited from state funds, a charge they deny.

Albakri said that he did not expect other jurisdictions to criticize support given to airlines due to the coronavirus.

Emirates, the Middle East’s biggest carrier, is asking its staff to take paid and unpaid leave to help it manage a “measurable slowdown” due to the virus.

Air ticket sales to, from, and within the Middle East are seen dropping over the next few weeks, and airlines in the region stand to lose about $100 million in revenue at this stage, AlBakri said.

Middle Eastern carriers, most of which are unprofitable, have stopped most flights to China and cut or reduced flights on other Asian routes.

“Significant additional revenue is at risk to the Middle East carriers if the travel restrictions spread further to the rear of Asia Pacific,” Albakri said.

Roughly 50 percent of all Middle East airline capacity is flown on services to and from Asia Pacific, he said, highlighting the considerable risk to their business. 

HSBC reports lighter-than-expected third-quarter profit fall

Updated 27 October 2020

HSBC reports lighter-than-expected third-quarter profit fall

  • HSBC has a further headache – geopolitical tensions via its status as a major business conduit between China and the West

HONG KONG: HSBC said Tuesday its third-quarter post-tax profits fell 46 percent on-year as the Asia-focused banking giant continued to take a hammering from the coronavirus pandemic and spiraling China-US tensions.
However, the profit falls were not as bad as some analysts had predicted and HSBC said it expected credit losses to be at the lower end of a previously announced $8 billion to $13 billion range.
The global economic slowdown caused by the virus has hit financial giants hard and there is limited optimism on the horizon as Europe and the United States head into the winter with infections soaring once more.
HSBC has a further headache — geopolitical tensions via its status as a major business conduit between China and the West.
As a result, the lender is in the midst of a worldwide overhaul, aiming to slash some 35,000 jobs by 2022, primarily in its less profitable European and American divisions.
“We are accelerating the transformation of the Group, moving our focus from interest-rate sensitive business lines toward fee-generating businesses, and further reducing our operating costs,” chief executive Noel Quinn said in a statement accompanying the results.
Reported post-tax profit for the third quarter came in at $2 billion with revenue down 11 percent at $11.9 billion, the statement said.
Adjusted pre-tax profit slid 21 percent to $4.3 billion in the period, beating a $2.8 billion estimate by Bloomberg analysts.
Quinn described the latest figures as “promising results against a backdrop of the continuing impacts of Covid-19 on the global economy” as well as low interest rates.
In the first six months of 2020, HSBC’s post-tax profits were down 69 percent, meaning the third-quarter results were something of an improvement as some major economies relaxed some of their coronavirus restrictions.
The bank said its board would consider whether to pay “a conservative dividend” for 2020 based on final end of year results and how the global economy looks in early 2021.
Earlier this year, UK regulators called on British banks to scrap dividends for the year to preserve capital during the pandemic crisis.
HSBC makes 90 percent of its profit in Asia, with China and Hong Kong being the major drivers of growth.
As a result, it has found itself more vulnerable than most to the crossfire caused by the increasingly bellicose relationship between Beijing and Washington.
The bank has tried to stay in Beijing’s good graces.
It vocally backed a tough national security law that Beijing imposed on Hong Kong in June to end a year of unrest and pro-democracy protests.
The move sparked criticism in Washington and London but analysts saw it as an attempt to protect its access to China, which has a track record of punishing businesses that do not toe Beijing’s line.
“Geopolitical risk, particularly relating to trade and other tensions between the US and China, remains heightened,” HSBC said in Tuesday’s profit statement.
The US has sanctioned nearly a dozen key Hong Kong and Chinese officials over the national security law, telling international banks to stop doing business with them.
China’s national security law, however, forbids businesses in Hong Kong from adhering to foreign sanctions regimes, leaving many in an unclear regulatory tight spot.
“Investor and business sentiment in some sectors in Hong Kong remains dampened and ongoing tensions could result in an increasingly fragmented trade and regulatory environment,” HSBC said in its statement.
The bank also highlighted the uncertainty over Britain’s withdrawal from the European Union as another potential headwind.
Talks for a post-Brexit trade deal have made little headway with a 31 December deadline fast approaching.
“There is a risk of additional ECL (expected credit losses) charges, particularly in the UK in 4Q20, if the UK and the EU fail to reach a trade agreement,” the bank said.