Middle East airlines’ passenger traffic nosedive in April

This picture shows a Boeing 787-10 Dreamliner of the Etihad airline during take-off on September 24, 2019 at the airport in Duesseldorf, western Germany. (File/AFP)
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Updated 06 June 2020

Middle East airlines’ passenger traffic nosedive in April

  • UAE-based Emirates and Etihad Airways will resume some transit flights
  • IATA said the global demand for air services is starting to show recovery

DUBAI: Passenger traffic for Middle East airlines plummeted 97.3 percent in April, versus a less-steeper dive of 50.3 percent a month earlier, the International Air Transport Association (IATA) said in a report.
“April was a disaster for aviation as air travel almost entirely stopped. But April may also represent the nadir of the crisis,” Alexandre de Juniac, IATA’s director general and CEO, said in a statement
“Flight numbers are increasing. Countries are beginning to lift mobility restrictions. And business confidence is showing improvement in key markets such as China, Germany, and the US.”
UAE-based Emirates and Etihad Airways will resume some transit flights after the country lifted a suspension on services where passengers stop off in the country to change planes, or for refueling.
Emirates, one of the world’s biggest long-haul airlines, would operate transit flights to 29 destinations in Asia, Europe and North America by June 15 while Etihad would carry transit passengers to 20 cities in Europe, Asia and Australia from June 10.
With aircraft of Middle East airlines grounded, and replicated globally due to the coronavirus pandemic, capacity tumbled 92.3 percent while the load factor decreased to 27.9 percent in April.
But IATA said the global demand for air services is starting to show recovery “after hitting bottom in April.”
There “are positive signs are we start to rebuild the industry from a stand-still. The initial green shoots will take time – possibly years – to mature,” de Juniac added.
Meanwhile, the Abu-Dhabi based carrier will extend salary cuts for employees until September even as other UAE airlines Emirates and Air Arabia confirmed job cuts due to the effects of the coronavirus pandemic.
“Etihad is continuing to consider all options to protect jobs and preserve cash at this challenging time. Regretfully, Etihad has extended its salary reduction until September 2020, with 25 percent reduction for junior staff and cabin crew, and 50 percent for employees at manager level and above. Housing allowance and a number of benefits continue to be paid,” a statement from Etihad said.

Oman’s bond market return a key test for reform path

Updated 21 October 2020

Oman’s bond market return a key test for reform path

  • After becoming ruler in January, Sultan Haitham made shaking up and modernising state finances a top priority

DUBAI: Oman’s return to the international bond market this week will be a test of its ability to convince investors that long-awaited fiscal reforms have started to put it on a sustainable financial footing.

Oman, rated below investment grade by all the major credit agencies, announced on Monday plans to issue bonds with maturities of three, seven and 12 years, in what would be its first global debt sale this year.

Sultan Haitham, who became Oman’s ruler in January, has made shaking up state finances one of his priorities.

But investors would like to see more concrete steps being taken and, after a further sovereign downgrade last week, may require the new bonds to offer a significant premium over the country’s existing debt.

“The new sultan has done some good things — rationalizing the number of ministries, the implementation of VAT, plans to generate additional tax revenues, and they still have sovereign assets,” said Raza Agha, head of emerging markets credit strategy at Legal & General Investment Management.

“There is positive momentum but it will take time for that credibility to build.”

According to a bond prospectus, Oman has begun talks with some Gulf countries for financial support.

“I don’t think this will actually be taken into consideration by investors unless there is a tangible announcement from Gulf countries with a tangible support package,” said Zeina Rizk, executive fixed income director at Arqaam Capital.

Oman will likely price the new three-year bonds in the high 4 percent area, the seven-year tranche in the high 6 percent and the 12-year in the mid-to-high 7 percent area, implying a premium of at least 50 basis points (bps) over its existing curve, she said.

Two other investors, who did not wish to be named, said the paper could carry a 25 bps premium over existing secondary trading levels.

Sources have previously told Reuters Oman would target over $3 billion with the new deal.

“If they take $3 to 3.5 billion, you will have a market indigestion for Oman, and I’m sure people will ask to be compensated for this risk,” Rizk said.