Aviation industry will start making profit by 2023, predicts IATA economist

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Updated 26 June 2022

Aviation industry will start making profit by 2023, predicts IATA economist

Aviation industry will start making profit by 2023, predicts IATA economist

RIYADH: Aviation will not reach pre-pandemic profitability levels of $26.4 billion anytime soon because we don’t really see the gross domestic product growth accelerating but, according to International Air Transport Association’s Chief Economist Marie Thomsen, the industry will start seeing earnings in 2023.
Global airlines are now expected to post a $9.7 billion loss in 2022, an improvement from a revised $42.1 billion loss in 2021.

The 2022 forecast is nearly $2 billion better than an earlier expectation of an $11.6 billion loss.

COVID-19 fallout
At IATA’s Annual General Meeting in Doha, Thomsen told Arab News that COVID-19’s magnitude “makes all previous crises look like a slight cold.” 

Despite the fact that China’s zero COVID-19 policy is affecting the aviation industry, she believes that the policy could be altered.

Thomsen explained that the virus has evolved, and while it has infectious variants, they are less deadly. In itself, the virus’ progression argues for fewer and fewer travel restrictions, she added. 

She said that even if airlines are thriving, they will still feel the effects of the COVID crisis for decades to come. 

HIGHLIGHTS

Global airlines are now expected to post a $9.7 billion loss in 2022, an improvement from a revised $42.1 billion loss in 2021.

The 2022 forecast is nearly $2 billion better than an earlier expectation of an $11.6 billion loss.

Future unpredictable
The risks are unpredictable and she does not know how long the war in Europe will last or what will happen to oil prices, Thomsen said. “But, nevertheless, barring unexpected events, it should be possible for the industry as a whole to show a profit next year,” she added. 

According to Thomsen, prices are still going down for consumers, and this is in the interest of the global economy since connectivity is one of the key drivers of economic growth.

In terms of aviation concerns, Thomsen described the regulatory environment that airlines are mostly concerned about as “unstable” and “fragmented.”

“Reducing global connectivity hurts not only airlines and their customers, but also global economic output,” she said. 




International Air Transport Association’s Chief Economist Marie Thomsen

Aviation in focus
Several forms of connectivity are essential for the global economy, Thomsen said, and aviation is one of them.

“Aviation is not in opposition to other modes of transport; all modes of transport are essential to the global economy,” she added.

Despite not being a government agency, IATA tries to support airlines with analysis and research even though it cannot provide funds, she said. 

According to Thomsen, governments seem to view airlines as a honeypot that the industry can dip into and profit from. “This is obviously a misconception based on our numbers; there is no honey in the pot,” she said.

As a result, the government could work on the upside of airlines’ value chain to introduce more competition if it had a different attitude toward them, she added. 

“If you have oligopolistic structures over here and hypercompetitive structures here, that’s obviously not aligned,” Thomsen said.

She concluded that, in her opinion, the main issue in the aviation industry is that they have a skewed value chain.

 

 


SpaceX’s Starlink Internet gets US regulator's nod for use with ships, boats, planes

SpaceX’s Starlink Internet gets US regulator's nod for use with ships, boats, planes
Updated 6 sec ago

SpaceX’s Starlink Internet gets US regulator's nod for use with ships, boats, planes

SpaceX’s Starlink Internet gets US regulator's nod for use with ships, boats, planes
  • SpaceX has steadily launched some 2,700 Starlink satellites to low-Earth orbit since 2019
  • It has amassed hundreds of thousands of subscribers, including many who pay $110 a month for broadband Internet

WASHINGTON: The US Federal Communications Commission on Thursday authorized Elon Musk’s SpaceX to use its Starlink satellite Internet network with moving vehicles, green-lighting the company’s plan to expand broadband offerings to commercial airlines, shipping vessels and trucks.
Starlink, a fast-growing constellation of Internet-beaming satellites in orbit, has long sought to grow its customer base from individual broadband users in rural, Internet-poor locations to enterprise customers in the potentially lucrative automotive, shipping and airline sectors.
“Authorizing a new class of terminals for SpaceX’s satellite system will expand the range of broadband capabilities to meet the growing user demands that now require connectivity while on the move,” the FCC said in its authorization published Thursday, echoing plans outlined in SpaceX’s request for the approval early last year.
SpaceX has steadily launched some 2,700 Starlink satellites to low-Earth orbit since 2019 and has amassed hundreds of thousands of subscribers, including many who pay $110 a month for broadband Internet using $599 self-install terminal kits.
The Hawthorne, California-based space company has focused heavily in recent years on courting airlines around Starlink for in-flight WiFi, having inked its first such deals in recent months with Hawaiian Airlines and semi-private jet service JSX.
“We’re obsessive about the passenger experience,” Jonathan Hofeller, Starlink’s commercial sales chief, said at an aviation conference earlier this month. “We’re going to be on planes here very shortly, so hopefully passengers are wowed by the experience.”
SpaceX, under an earlier experimental FCC license, has been testing aircraft-tailored Starlink terminals on Gulfstream jets and US military aircraft.
Musk, the founder and CEO of SpaceX, has previously said that the types of vehicles Starlink was expected to be used with pursuant to Thursday’s authorization were aircraft, ships, large trucks and RVs. Musk, also the CEO of electric car maker Tesla Inc, had said he didn’t see “connecting Tesla cars to Starlink, as our terminal is much too big.”
Competition in the low-Earth orbiting satellite Internet sector is fierce between SpaceX, satellite operator OneWeb, and Jeff Bezos’s Kuiper project, a unit of e-commerce giant Amazon.com which is planning to launch the first prototype satellites of its own broadband network later this year. 

 


Bitcoin falls below $19,000, further shaking crypto markets

Bitcoin falls below $19,000, further shaking crypto markets
Updated 01 July 2022

Bitcoin falls below $19,000, further shaking crypto markets

Bitcoin falls below $19,000, further shaking crypto markets

Bitcoin dropped 6.1% to $18,866.77 at 2004 GMT on Thursday, putting the biggest and best-known cryptocurrency down $1,226.41 from its previous close and down 60.9% from the year's high of $48,234 on March 28.
Several big players in the cryptocurrency markets have had difficulties, and further declines could force other crypto investors to sell holdings to meet margin calls and cover losses.
Ether, the coin linked to the ethereum blockchain network, dropped 7.5% to $1,016.08 on Thursday, losing $82.38 from its previous close.
Both digital assets have struggled since U.S. based lender Celsius Network this month said it would suspend withdrawals. Bitcoin and ether were further rattled by the apparent insolvency of crypto hedge fund Three Arrows Capital, which a person familiar with the matter told Reuters has entered liquidation.
Many of the industry's recent problems can be traced back to the spectacular collapse of so-called stablecoin TerraUSD in May, which saw the stablecoin lose almost all its value, along with its paired token. (Reporting by Mrinmay Dey in Bengaluru and Hannah Lang in Washington; Editing by David Gregorio)


Crypto rules to make Europe global leader as prices plunge

Crypto rules to make Europe global leader as prices plunge
Updated 01 July 2022

Crypto rules to make Europe global leader as prices plunge

Crypto rules to make Europe global leader as prices plunge
  • EU to subject cryptocurrency transfers to money laundering rules

RIYADH: Europe prepares to lead the world in regulating the cryptocurrency industry at a time when prices have plunged, wiping out fortunes, fueling skepticism and sparking calls for tighter scrutiny.

The EU took a first step late Wednesday by agreeing on new rules subjecting cryptocurrency transfers to the same money laundering rules as traditional banking transfers.

A much bigger move was expected as EU negotiators hammer out the final details late Thursday on a separate deal for a sweeping package of crypto regulations for the bloc’s 27 nations, known as Markets in Crypto Assets, or MiCA.

Like the EU’s trendsetting data privacy policy, which became the de facto global standard, the crypto regulations are expected to be highly influential worldwide.

The EU rules are “really the first comprehensive piece of crypto regulation in the world,” said Patrick Hansen, crypto venture adviser at Presight Capital, a venture capital firm.

Patrick Hansen, analyst

“I think there will be a lot of jurisdictions that will look closely into how the EU has dealt with it since the EU is first here,” Hansen said.

He expected authorities in other places, especially smaller countries that don’t have the resources to draw up their own rules from scratch, to adopt ones similar to the EU’s, though “they might change a few details.”

Companies issuing or trading crypto assets such as stablecoins face tough transparency requirements requiring them to provide detailed information on the risks, costs and charges that consumers face.

Providers of bitcoin-related services would fall under the regulations, but not bitcoin itself, the world’s most popular cryptocurrency that has lost more than 70 percent of its value from its November peak.

Russia probes 400 cases

The Federal Financial Monitoring Service of the Russian Federation is trying to detect around 400 cases in which cryptocurrencies are involved, the agency’s director, Yury Chikhanchin, revealed the number during a meeting with President Vladimir Putin.

Russian law enforcement authorities have already initiated 20 criminal cases related to digital assets, Bitcoin.com reported.

Chikhanchin acknowledged that Russians continue to actively use cryptocurrency platforms located outside the country.

“This phenomenon continues to exist. And only on two foreign sites, two exchanges, several hundred thousand Russian citizens participate in transactions worth tens of billions,” he said.

According to official data released earlier this year, the number of lawsuits related to cryptocurrency mining in Russia exceeded 1,500 in 2021.

$100 million crypto hack

Digital investigative firms have concluded that North Korean hackers are most likely responsible for an attack last week that took as much as $100 million in cryptocurrency from a US company, according to Reuters.

Cryptocurrency assets were stolen on June 23 from Horizon Bridge, a service provided by Harmony blockchain that transfers assets between blockchains. The hackers’ activity since then suggests they may be affiliated with North Korea, which experts say is among the most prolific cyberattackers.

The UN sanctions monitors say Pyongyang uses the stolen funds to finance its nuclear and missile programs.


Fitch cuts view on global sovereign debt over rise in borrowing costs

Fitch cuts view on global sovereign debt over rise in borrowing costs
Updated 01 July 2022

Fitch cuts view on global sovereign debt over rise in borrowing costs

Fitch cuts view on global sovereign debt over rise in borrowing costs

LONDON: Credit rating agency Fitch downgraded its view on sovereign debt on Thursday on concerns about the rise in global borrowing costs and the potential for a flurry of new defaults.

Fitch, which monitors over 100 countries, said the Ukraine-Russia war was stoking problems such as higher inflation, trade disruptions and weaker economies which are all now hurting sovereign credit conditions.

“Rising interest rates are increasing government debt-servicing costs,” Fitch’s Global Head of Sovereigns, James McCormack, said, cutting the firm’s view on the sovereign sector to “neutral” from “improving.”

“Most exposed are emerging market (EM) sovereigns, but some highly indebted developed markets are at risk as well, including in the eurozone.” The number of countries seeing their credit ratings cut has begun to rise again this year as the pressures have built.

Most of the governments Fitch covers have either brought in subsidies or cut tax cuts to try to cushion the impact of surging inflation. But that carries costs.

“While modest fiscal deteriorations can be absorbed by the positive effects inflation has on government debt dynamics, such effects depend on the retention of low interest rates, which are now less certain,” McCormack said.

While commodity exporters will benefit from higher prices, those who have to import the bulk of their energy or food will suffer.

Gross external funding needs will be highest this year in both nominal terms and relative to foreign exchange reserves for EM sovereigns that are net importers of commodities, McCormack added.

“They now face tighter global funding conditions, and with a record-high share of sovereigns rated in the ‘B’ category or lower, it is likely there will be additional defaults.”

The list of countries either in default or whose financial market bond yields suggest they will be currently stands at a record 17.

Those 17 are Pakistan, Sri Lanka, Zambia, Lebanon, Tunisia, Ghana, Ethiopia, Ukraine, Tajikistan, El Salvador, Suriname, Ecuador, Belize, Argentina, Russia, Belarus and Venezuela.


Saudis reportedly in talks over stake in luxury car manufacturer Aston Martin

Saudis reportedly in talks over stake in luxury car manufacturer Aston Martin
Updated 30 June 2022

Saudis reportedly in talks over stake in luxury car manufacturer Aston Martin

Saudis reportedly in talks over stake in luxury car manufacturer Aston Martin
  • The Kingdom’s Public Investment Fund is said to be considering taking a $243.5m stake in the British company that make the vehicles favored by movie spy James Bond

LONDON: Saudi Arabia’s Public Investment Fund is reportedly in talks with Aston Martin over acquiring what the Financial Times newspaper said would be a $243.5 million stake in the luxury carmaker.

The British manufacturer refused to confirm or deny the reports but following the news on Thursday, a fall in the company’s share price was reduced to nine percent from a 20 percent drop earlier in the day.

Since its initial public offering in 2018, the carmaker — whose vehicles frequently appear in James Bond movies — has struggled, with the share price falling by nearly 68 percent this year alone.

In January, Aston Martin blamed lower-than-expected profits on delays in shipments of its limited edition Valkyrie sports car, but the company said on Thursday that production of the model has started to pick up pace.

In a further effort to reassure investors, it added that its management team, led by new boss Amedeo Felisa, is increasingly focusing on the launch of new models beginning in 2023.

Citing four sources said to be close to the PIF investment talks, the FT said Aston Martin is seeking to raise additional funding for its new range of cars. Autocar magazine reported that the manufacturer is also in talks with a US-based investment fund as it looks to raise capital.