DUBAI/MILAN/PARIS: The naming of a new boss at Etihad Airways presents the Gulf carrier with an opportunity to rethink its aggressive expansion strategy after the failure of minority-owned Alitalia underlined the big barriers to global growth. Ray Gammell was appointed interim CEO this week, days after Alitalia sought bankruptcy protection with $3.3 billion of debt. He replaces veteran boss James Hogan.
Hogan’s strategy was to buy up minority stakes in myriad airlines but the struggles of that strategy, most recently with Alitalia, are emblematic of a quandary peculiar to the industry. The path to growth for airlines often lies in gaining access to rivals’ routes. Yet in the EU, which mainly operates as one nation in aviation, foreigners cannot majority-own an airline. At Alitalia, the lack of full control meant that Etihad could not deal effectively with labor problems.
Since 2011, Abu Dhabi’s state-owned Etihad has spent billions of dollars buying minority stakes from Europe to Australia as it races to catch up with regional rivals Emirates and Qatar Airways.
Alitalia was Etihad’s eighth and most high-profile bet. But the €560 million ($609 million) investment lies in tatters, placing Hogan’s wider strategy under the microscope after staff overwhelmingly rejected its latest restructuring plans. Now the future of Etihad’s other leading investment, in Air Berlin, is also in doubt as the Gulf carrier pursues a strategy review that began last year. Like Alitalia, the German carrier has made big losses and it said two weeks ago it was seeking a new partner, which could include a new investor.
An Etihad spokesman said its review was ongoing but declined to comment on how its strategy might change or the impact of Alitalia’s failure on its global plans.
But a senior source at the Gulf carrier said lessons would be learned from the Italian investment and they would play a role in shaping future strategy.
Etihad’s strategy has allowed it to cut costs by pooling items like airplane procurement while offering a larger network; it says it brings together 600 destinations and over 700 aircraft.
Hogan’s “approach to partnerships did not pan out, but a few of his principles are still valid,” said Will Horton, a senior analyst at Australian aviation consultancy CAPA.
Etihad’s efforts to grow through minority stakes have at times been compared to Swissair’s failed “Hunter” strategy of the 1990s. Swissair’s buying binge, often acquiring stakes in ailing airlines, contributed to huge losses which eventually saw it grounded in 2001 and sold to Germany’s Lufthansa in 2005.
Hogan has always rejected the comparison, saying Etihad was doing things differently to Swissair and had demonstrated it could control costs. Etihad and its rivals have demonstrated spectacular growth but are increasingly pressured by a slowing Gulf economy due to relatively low oil prices. They have chosen different strategies to sidestep the regulatory dilemma governing foreign ownership and pursue global expansion.
Qatar Airways, like many other carriers, has entered one of three global alliances. These give some access to other carriers’ traffic rights without breaking ownership rules but allow only limited control over route-planning and costs.
Dubai’s Emirates, by contrast, mainly operates alone — an approach that gives it control of over its network and costs but also means it carries all the risk. The Middle East’s largest airline reported a drop in annual profit on Thursday for the first time in five years.
As the youngest of the three major Middle Eastern carriers, 14-year-old Etihad has looked to catch up and followed a third path of buying into other airlines to expand its reach.
When Hogan rescued Alitalia in 2014 after months of negotiations, he had been encouraged by two reformist prime ministers, Enrico Letta and his successor Matteo Renzi. Letta flew to Abu Dhabi to help clinch the deal.
“When Etihad arrived in 2014, we thought this time it would finally work, that this was it,” said Alitalia pilot Stefano Di Cesare of the Fit-Cisl union. Yet, Italian industry leaders say Etihad underestimated the country’s tangled politics and chronic labor strife.
Italian executives, officials and unions said in interviews with Reuters that alienating Alitalia’s workforce was among a series of missteps that ended Etihad’s Italian dream. Many also say Etihad underestimated the blistering growth of low-cost carriers Ryanair and easyJet. Without a majority stake, Etihad’s influence was limited despite being the largest single investor on 49 percent. And despite the lure of Italy’s important tourism market, it was forced to watch Alitalia’s efficient rivals mop up the benefits.
“There is no doubt that the idea to manage the company from Abu Dhabi was a very serious mistake,” Italian Industry Minister Carlo Calenda told Parliament last week.
The Etihad spokesman said Alitalia had been in financial trouble for decades and that its investment was welcomed wholeheartedly in Italy. Etihad believed the new restructuring plan developed by Alitalia’s management would have addressed its problems, he added.
In Germany too, Etihad had seen Air Berlin, its first investment in 2011, as the door to unrestricted access in a market where it has limited traffic rights with its own planes. But that airline has seen losses widen to a record €782 million in 2016. For now, Etihad continues to provide funding. Air Berlin says Etihad has granted another loan facility of €350 million and a letter of support for at least 18 months. But industry sources say Etihad could exit Air Berlin by seeking a deal with German flag carrier Lufthansa, with which Etihad is keen to work.
Lufthansa CEO Carsten Spohr said on Friday he had held talks with Abu Dhabi about the future of Air Berlin, but that it was up to the emirate to resolve Air Berlin’s €1.2 billion debt problem, which also prevents Lufthansa buying it.
Other investments such as Air Serbia and Air Seychelles have been more successful. There, Etihad was given hands-on management control and benefited from close diplomatic ties.
Even as the carrier picks up the pieces of its European adventure, Etihad faces its own restructuring that sources close to the company say has seen near-daily redundancies.
This may also weigh on the strategic decision facing Gammell, as he takes up his interim post this week, followed in coming months by a permanent successor to Hogan.
New Etihad boss to rethink strategy after Alitalia dream fails
New Etihad boss to rethink strategy after Alitalia dream fails
US Tariffs: Trump imposes 10% levies on GCC countries; Syria, Iraq hit hard
RIYADH: Gulf Cooperation Council nations will face a 10 percent US tariff under Donald Trump’s new trade policy, aimed at addressing what he called long-standing unfair practices.
While the GCC was spared the steepest penalties, other Arab nations were hit harder — with Syria and Iraq facing tariffs of 41 percent and 39 percent, respectively, followed by Libya at 31 percent, Algeria at 30 percent, Tunisia at 28 percent, and Jordan at 20 percent.
Egypt, Morocco, Lebanon, and Sudan received the same 10 percent baseline as the GCC, reflecting their relatively stable trade ties with the US, particularly in oil and petrochemical exports.
Hamza Dweik, head of trading at Saxo Bank, told Arab News: “Non-energy sectors in the GCC that are most vulnerable to the new tariffs include electronics, automobiles, construction, retail, and consumer goods.”
He added: “These industries rely heavily on imported goods, and the increased costs from tariffs could lead to higher prices for consumers and reduced competitiveness in the market.”
Dweik also cautioned that the region’s financial services sector may face challenges, as heightened global uncertainty could disrupt investment flows and impact regional financial markets.
Concerns have been raised that even a baseline tariff could have ripple effects across GCC supply chains, especially in metals, chemicals, and industrial sectors.
Dweik said that global retaliation or trade spillovers are a possibility and could indirectly affect the Gulf economies.
“The uncertainty in policy and potential for rapid changes weigh heavily on global markets, including those in the GCC. The region’s focus should be on diversifying trade relationships and strengthening ties with unaffected regions to mitigate potential losses,” he added.
Oil exempt from tariffs
In a notable relief for Gulf exporters, the White House has confirmed that oil and gas imports will be exempt from the new tariffs. The decision — which also applies to energy imports from Canada, Mexico, and Europe — is intended to avoid disrupting US energy markets and driving up fuel prices.
For the GCC, this exemption protects the region’s most critical export sector, as oil and gas account for over 60 percent of Saudi Arabia’s exports to the US and remain a key pillar of Gulf-US trade.
“Given the GCC’s reliance on oil exports, any global economic slowdown caused by trade tensions has the potential to negatively impact oil prices, putting extra strain on their economies,” said Dweik, adding: “The exemption helps mitigate some of these impacts, ensuring that the primary revenue stream for these countries remains relatively stable despite the broader trade disruptions.”
Tariffs have long been a cornerstone of Donald Trump’s economic strategy, rooted in his “America First” agenda to protect domestic industries and reduce trade deficits.
The president reignited this approach with sweeping new import duties, arguing that unfair trade practices have disadvantaged US workers for decades.
Countries hit hardest by the tariff hikes — including China, the EU, Australia, and Japan — have sharply criticized the move, with several already imposing retaliatory duties on US goods. The sweeping measures have raised alarms globally, fueling concerns over rising protectionism, supply chain disruptions, and the risk of a broader trade war.
While the GCC countries are not among the hardest hit, analysts have warned that the region’s exporters may still face rising costs, supply chain disruptions, and increased trade friction — particularly in sectors such as aluminum, petrochemicals, and industrial goods.
GCC indirect risk from US tariffs
According to a February analysis by S&P Global Market Intelligence, countries including Saudi Arabia and the UAE — which maintain fixed exchange rates to the US dollar — are particularly vulnerable to tighter monetary conditions, as the US Federal Reserve may keep interest rates elevated to contain inflationary pressures stemming from trade disruptions.
A stronger dollar could erode export competitiveness and weaken trade balances in these pegged economies. The report warns that sustained high US interest rates could also reduce portfolio inflows into emerging market debt, potentially triggering capital outflows and liquidity pressures — particularly in debt-stressed countries such as Egypt and Tunisia.
Although Egypt’s position has improved through Gulf investments and an International Monetary Fund program, a prolonged US rate tightening cycle could undermine this recovery.
Moreover, if oil prices fall amid global economic slowdowns, GCC oil exporters may be compelled to delay infrastructure spending, putting pressure on large-scale diversification programs.
Shipping giant Maersk has warned of the global ripple effects of the new US tariffs, cautioning that escalating trade tensions could disrupt supply chains and raise shipping costs worldwide.
For the GCC region, which relies heavily on maritime trade for both oil and non-oil exports, such disruptions pose a notable risk. While Gulf oil exports to the US remain exempt, sectors like aluminum, petrochemicals, and industrial goods could be indirectly impacted by slower global demand and rising freight costs.
Dweik noted that the GCC could potentially benefit from shifting global trade patterns — particularly if US tariffs remain focused on competitors in other regions.
Reaction of GCC equity market
Regional equity markets in the GCC largely declined following the tariffs announcement, according to data from Bloomberg.
Saudi Arabia’s main index, the Tadawul All-Share Index, fell by 72.78 points or 0.61 percent, while the parallel Nomu market dropped 0.77 percent at 12:20 p.m. Saudi time. The UAE saw the steepest declines, with the Abu Dhabi index sliding 2.86 percent and Dubai’s DFM index dropping 2.64 percent.
Oman’s Muscat Stock Exchange MSX 30 Index lost 0.76 percent, Bahrain Bourse All Share Index fell 0.50 percent, and Jordan’s Amman Stock Exchange General Index declined by 1.70 percent.
In contrast, Qatar emerged as an outlier, with all major indices showing positive movement. The Qatar Stock Exchange gained 0.46 percent, possibly reflecting investor confidence in the country’s diversified economic positioning and lower direct exposure to US trade policy risks.
While oil exports from the region remain exempt from the new tariffs, market sentiment appears to have been weighed down by concerns over indirect impacts on key sectors such as metals, manufacturing, and industrial goods. The reaction underscores growing investor sensitivity to escalating global trade tensions and their potential spillover effects on regional economies.
GCC actions to mitigate US tariff risks
Although the latest US tariffs primarily target China, Mexico, and Canada, GCC exporters cannot afford to remain passive. With the US explicitly tying its trade policy to national security and reviewing all global trade deals under a “Fair and Reciprocal Plan,” Gulf-based businesses face increased exposure.
According to PwC’s March trade advisory report, newly announced tariffs on aluminum and steel will apply across all countries — including the UAE, Bahrain, and Oman — overriding existing free trade agreements. The report also warns that duty drawbacks will no longer apply to these commodities, raising costs for GCC exporters and affecting competitiveness in the US market.
PwC recommended that GCC companies urgently evaluate their exposure by modeling cost impacts, revisiting trade classifications, and leveraging tools like free trade zones and customs optimization strategies.
Businesses should also strengthen trade compliance, invest in digital supply chain solutions, and explore market diversification to reduce US dependency.
As the global trade environment shifts toward more protectionist policies, the report concludes that a “wait-and-see” approach is no longer viable for the region.
OPEC+ to advance oil output hike plan, oil drops
LONDON/MOSCOW: Eight OPEC+ countries agreed on Thursday to advance their plan for oil output hikes by increasing oil output by 411,000 barrels per day in May, prompting oil prices to extend earlier losses.
“This comprises the increment originally planned for May in addition to two monthly increments,” OPEC said in a statement.
Oil, which was already down over 4 percent on US President Donald Trump’s announcement of tariffs on trading partners, extended declines after the OPEC statement, with Brent crude dropping over 5 percent toward $71 a barrel.
Saudi drilling firm ADES enters Brazil with $85.1m charter agreement
RIYADH: Saudi exploration service provider ADES Holding Co. has entered the Brazilian market through an $85.1 million charter agreement.
The deal, which was made with Luxembourg’s Constellation Oil Services Holding, will use ADES’ jackup rig, Admarine 511, to support a drilling contract with Petrobras, Brazil’s state-owned energy giant.
The agreement marks a significant expansion of ADES’ Latin American operations and underscores the company’s strategy of entering new markets through alternative contracting models.
The charter, which has a duration of about 38 months, includes an optional 472-day extension that could bring the total contract term to 4.5 years.
The Admarine 511 rig is currently undergoing preparations at the Arab Shipbuilding and Repair Yard in Bahrain ahead of deployment, with drilling operations in Brazil expected to commence in the fourth quarter of 2025.
CEO of ADES, Mohamed Farouk, commented on the new agreement, saying: “We are excited to enter the Brazilian market through this strategic Charter with Constellation to support Petrobras, Brazil’s national oil company.”
Farouk added: “This agreement not only expands our global footprint but also enhances our business sustainability with a long-term contract that strengthens our backlog and provides extended cash flow visibility.”
The company estimates the additional backlog from the charter to be SR319 million ($85.1 million), including mobilization and demobilization fees.
ADES noted that while Constellation will operate the rig locally, the charter structure ensures that a majority of the revenue generated will contribute directly to ADES’ profitability.
Listed on the Saudi stock market, ADES saw a 1.23 percent drop in its share price to SR16.12 as of 12:30 p.m. Saudi time.
The deal comes on the back of strong financial performance by ADES Holding in 2024, reflecting the group’s continued growth trajectory.
The firm recorded an 80.54 percent increase in net profit, reaching SR816.19 million, up from SR452.07 million in 2023.
Revenues also surged by 43.10 percent year-on-year to SR6.19 billion, compared to SR4.33 billion the previous year.
Earnings per share rose to SR0.73 in 2024, up from SR0.59 in 2023, underscoring improved profitability and operational efficiency.
Farouk further stated that the firm selected the charter model to navigate Brazil’s operational landscape more effectively.
“Recognizing the unique challenges of each market, ADES strategically opted for a Charter model that facilitates a seamless entry into Brazil while maximizing profitability and delivering higher returns for our shareholders,” Farouk added.
Egypt’s non-oil sector sees minor setback in March, Lebanon’s PMI declines: S&P Global
RIYADH: Egypt’s non-oil private sector saw a slight decline in business conditions in March, with the country’s Purchasing Managers’ Index easing to 49.2 from 50.1 in February, according to S&P Global.
In Lebanon, the PMI slipped to a five-month low of 47.6, reflecting softer economic activity amid regional uncertainty and subdued tourism.
A PMI reading above 50 indicates expansion, while a figure below that signals contraction.
The trends in Egypt and Lebanon contrast with broader regional performance, where Saudi Arabia, the UAE, and Kuwait maintained expansionary momentum in February, with PMIs of 58.4, 55, and 51.6, respectively.
Egypt’s non-oil sector slips in March
Weakened demand drove Egypt’s non-oil private sector into contraction territory, prompting firms to cut back on activity and purchases.
David Owen, senior economist at S&P Global Market Intelligence, said: “The non-oil sector suffered a minor setback in March, with a decline in business conditions undermining the more expansionary tone set in the first two months of the year.”
However, he noted that Egypt’s PMI remained above its long-run trend, suggesting businesses were still in a relatively stable position.
The latest PMI survey indicated a significant easing of inflationary pressures, with input costs rising marginally — the slowest pace in nearly five years.
S&P Global also noted that firms reported only a slight increase in selling prices, signaling a more stable pricing environment.
“Firms will be particularly buoyed by the improved picture for inflation. Although headline inflation plummeted from 24 percent to 12.8 percent in February mostly due to base effects, a softening of input cost increases according to the March PMI data suggests there could be further reductions going forward,” said Owen.
He added: “Part of this softening was linked to a weaker US dollar, which remains greatly influenced by the evolving state of US trade policy.”
According to the report, non-oil companies in Egypt saw a drop in business activity for the first time this year, primarily due to weaker new order intakes.
S&P Global also highlighted that both domestic and international demand remained subdued in March, prompting firms to cut operations and spending.
Surveyed companies reported a reduction in headcounts as weak demand and limited capacity pressures dampened workforce needs.
On a positive note, the construction sector performed well in March, with survey data showing robust growth in both output and new work.
However, business activity in the manufacturing and wholesale and retail sectors remained subdued.
Looking ahead, companies expressed concerns about the economic outlook, with output expectations falling to one of the lowest levels on record.
“The outlook for the local economy is therefore somewhat unclear, which is reflected in a diminishing level of business expectations,” added Owen.
Egypt is implementing a series of reforms under its the International Monetary Fund-backed economic program.
In March, it secured a $1.2 billion disbursement from the IMF, bringing total funding under its economic reform program to $3.2 billion. The IMF also approved a $1.3 billion facility for climate-related reforms.
While the country’s gross domestic product growth rebounded to 3.5 percent in early 2024-25 and inflation has eased, fiscal challenges remain. A $6 billion drop in Suez Canal receipts widened the current account deficit to 5.4 percent of GDP in 2023-24, despite spending controls helping achieve a 2.5 percent fiscal surplus.
Lebanon’s PMI falls to five-month low
A separate S&P Global report, published in association with BLOMINVEST Bank, revealed that Lebanon’s PMI declined to 47.6 in March, down from 50.5 in February and 50.6 in January.
The drop was attributed to weaker output and new orders, driven by subdued tourism and ongoing regional instability.
Surveyed companies reported that restrained client purchasing power and consumer hesitancy toward non-essential spending led to a contraction in new order intakes at the end of the first quarter.
“The BLOM Lebanon PMI for March 2025 fell to a five-month low at 47.6, indicating a change of course in the economy toward instability,” said Ali Bolbol, chief economist and head of research at BLOMINVEST Bank.
He added: “The spillover effects from clashes on the Syrian coast, to renewed escalation between Israel and Hezbollah, to delays in the disarming of the latter have all left their de-stabilizing imprint on the Lebanese private sector.”
According to the report, Lebanese firms saw a decline in foreign sales, with challenging shipping conditions, high export costs, and regional instability acting as headwinds for international trade.
S&P Global noted that the drop in new business intakes helped firms clear backlogs of work for the first time this year.
Signs of spare capacity also prompted businesses to trim their workforce, though job cuts remained mild, affecting just 1 percent of surveyed firms.
Regarding purchasing activity, Lebanese private sector firms exercised more caution than in February, with buying volumes largely unchanged. However, surveyed companies reported faster shipping times for newly purchased items.
Despite the slowdown, business sentiment remained optimistic, with growth expectations reaching their highest level since the survey began in May 2013.
“The only worthwhile news from the March PMI results is that expectations of a better outlook are still positive, though at a more subdued level,” concluded Bolbol.
Last month, the IMF welcomed Lebanon’s request for support in tackling its economic crisis.
After more than two years without a president, Lebanon elected a new head of state in January and formed a government led by Prime Minister Nawaf Salam. In February, the IMF signaled openness to a new loan agreement following talks with the finance minister.
The previous caretaker administration failed to implement the reforms required for an IMF bailout to rescue the collapsed economy.
Saudi Arabia has highest number of Arab billionaires: Forbes
RIYADH: Saudi Arabia has solidified its position as the leading hub for billionaires in the Arab world with 15 making it onto the Forbes global 2025 list — the highest in the region.
According to the Forbes World’s Billionaires ranking, the wealth of the Saudis featured totaled $55.8 billion, representing 43.4 percent of the combined net worth of all Arab billionaires.
Leading the Saudi — and Arab — billionaire rankings is Prince Alwaleed bin Talal, with a net worth of $16.5 billion.
In the Middle East and North Africa region, the number of Arab billionaires has risen to 38, spread across nine countries, with a combined fortune of $128.4 billion— more than double last year’s total of $53.7 billion.
Globally, the billionaire population has surpassed 3,000 for the first time, reaching 3,028 individuals— an increase of 247 from 2024. Their total net worth has also climbed to $16.1 trillion, up nearly $2 trillion from the previous year. The US remains the leader with 902 billionaires, followed by China and India.
“It’s another record-breaking year for the world’s richest people, despite financial uncertainty for many and geopolitical tensions on the rise,” said Chase Peterson-Withorn, Forbes senior editor, wealth, adding: “And, from Elon Musk to Howard Lutnick and the other billionaires taking over the U.S. government, they’re growing more and more powerful.”
Saudi resurgence driven by new wealth
The Kingdom’s strong showing comes after a surge in initial public offerings on the Saudi Exchange post-COVID-19, propelling 14 new billionaires onto the list.
Other prominent Saudi figures include healthcare magnate Sulaiman Al-Habib, with a fortune of $10.9 billion, and diversified business leaders Emad and Essam Al-Muhaidib, whose wealth stands at $3.8 billion and $3.6 billion, respectively.
The UAE followed with five billionaires holding a combined $24.3 billion, including real estate tycoon Hussain Sajwani at $10.2 billion and newcomers Hussain Binghatti Aljbori and Hussain Mohamed Alabbar.
Egypt also has five billionaires, led by construction and investment mogul Nassef Sawiris, with a net worth of $9.6 billion.
Top Arab billionaires reflect diverse industries
The wealthiest Arabs span industries from real estate and healthcare to telecom and investments.
Among the top names are the UAE’s Abdulla Al-Futtaim, with $4.7 billion in the automotive industry, and Qatar’s Sheikh Hamad bin Jassim Al-Thani, with $3.9 billion in the investment sector.
This year’s rankings underscore the Kingdom’s growing economic influence, with its billionaire count outpacing other Arab nations. The rise in regional wealth highlights the expanding opportunities in Gulf markets, particularly in real estate, healthcare, and finance.
Elon Musk retained his position as the world’s richest person with a net worth of $342 billion, fueled by his ventures in electric vehicles, space exploration, and artificial intelligence.
Close behind is Meta CEO Mark Zuckerberg at $216 billion, followed by Amazon founder Jeff Bezos at $215 billion, as technology giants continue to dominate the upper echelons of wealth.
Oracle co-founder Larry Ellison ranks fourth with $192 billion, while Bernard Arnault, the French luxury magnate behind LVMH, rounds out the top five with $178 billion.
These five individuals represent a combined net worth of over $1.1 trillion, underscoring the influence of tech innovation and global consumer markets in shaping modern fortunes.
