New Etihad boss to rethink strategy after Alitalia dream fails

In this Dec. 18, 2014 file photo, an Emirati man takes a selfie in front of a new Etihad Airways A380 in Abu Dhabi, United Arab Emirates. (AP)
Updated 13 May 2017
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New Etihad boss to rethink strategy after Alitalia dream fails

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.


No intention of responding to tariffs imposed by Trump administration — Pakistan finmin

Updated 13 sec ago
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No intention of responding to tariffs imposed by Trump administration — Pakistan finmin

  • Islamabad was slapped with 29% tariff rate before Trump’s temporary suspension on Wednesday
  • 10% blanket duty on almost all US imports will remain in effect, the White House has said

ISLAMABAD: Pakistani Finance Minister Muhammad Aurangzeb has said Islamabad was concerned about new tariffs imposed by the US administration of President Donald Trump but had no intentions of imposing reciprocal taxes, BBC reported on Sunday.

Islamabad would have been slapped with a 29% tariff rate before Trump’s temporary suspension announcement on Wednesday. A 10% blanket duty on almost all US imports will remain in effect, the White House has said.

“There is a minimum tariff of 10% and then there is an additional tariff, I think we need to talk about this issue,” Aurangzeb said in an interview to the BBC. 

In response to a question about reciprocal tariffs, he said: “If your question is whether we are going to give any response [to the US] in return, the answer is no.”

“There is a situation of uncertainty, and we all have to think about how to move forward with this new world order,” the finance minister added. 

When asked if he felt Pakistan was losing out in the tug-of-war between the US and China, he said Washington had been a “strategic partner” of Pakistan for a long time, not just in trade but also in other sectors, while relations with China were important in their own right. 

A study by the Pakistan Institute of Development Economics (PIDE) entitled ‘Impact of Unilateral Tariff Increase by United States on Pakistani Exports’ said this month when added to the existing 8.6% Most Favored Nation (MFN) tariff, the total duty after the imposition of the 29% tariff could reach 37.6%. This would likely result in a 20-25% decline in Pakistani exports to the US, translating into an annual loss of $1.1-1.4 billion, with the textile sector bearing the brunt of the blow.

The textile sector in Pakistan generates about $17 billion in exports and is the largest employer in the country, according to the Pakistan Textile Council. The industry is expected to face significant challenges from the tariffs, with potential losses of up to $2 billion in textile exports estimated by experts if the 29% tariff rate is reinstated after Trump’s 90-day pause ends.

Despite the risks, the PIDE reports also view the tariffs crisis as an “opportunity for strategic transformation.” 

In the short term, it recommended that Pakistan engage in high-level diplomatic efforts to highlight the mutual costs of the tariffs and preserve long-standing trade relations. In the long term, it called for the need to diversify both export products and markets, seeing destinations such as the European Union, China, Asean nations, Africa and the Middle East as offering growth potential in sectors like IT, halal food, processed foods and sports goods.


Saudi Arabia eyes $31.6bn space economy as sector gains momentum

Updated 13 April 2025
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Saudi Arabia eyes $31.6bn space economy as sector gains momentum

RIYADH: Saudi Arabia’s space economy reached $8.7 billion in 2024 and is expected to grow to $31.6 billion by 2035, according to a new study. 

The Space Market Report 2025, released by the Communications, Space and Technology Commission, stated that the growth encompasses all value-added activities and industries derived from technologies and services, with a projected compound annual growth rate of 12 percent. 

The Kingdom’s space market—focused on commercial services and infrastructure—was valued at $1.9 billion in 2024 and is forecast to reach $5.6 billion by 2035, supported by increased investment in technologies and infrastructure. 

The report aims to chart the growth trajectory of the domestic and global space sectors, while also supporting market development, enhancing competitiveness, and identifying investment opportunities. 

CST Gov. Mohammad Al-Tamimi stated that the strong support from wise leadership is accelerating investment, infrastructure development, and the enabling of national talents. 

He added that these efforts contribute to the goals of Saudi Vision 2030 and aim to establish a competitive, sustainable space economy both regionally and internationally. 

Al-Tamimi also said the analysis is part of CST’s continued work to support the space sector as a new economic driver, contributing to the Kingdom’s global standing in technology and innovation. 

He described the publication as a valuable resource for decision-makers, investors, and entrepreneurs to understand future trends and promising growth opportunities in the sector. 

The study highlights several movements shaping the space industry, including the growth of Earth observation data analysis, infrastructure services, integrated communications systems, and advanced sensing technologies. 

It also notes the increasing development and deployment of small satellites and the expanding role of the private sector in both local and international space markets. 

Globally, the space economy is projected to grow from $687 billion in 2024 to $1.8 trillion by 2035, representing a CAGR of 9 percent. 

The global space market is forecast to increase from $176 billion to $377 billion in the same period, with a CAGR of 7 percent. 


Balanced growth beyond Riyadh vital to Vision 2030, says MBSC dean

Updated 13 April 2025
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Balanced growth beyond Riyadh vital to Vision 2030, says MBSC dean

RIYADH: As Saudi Arabia accelerates its economic diversification efforts under Vision 2030, ensuring balanced regional development is crucial, according to a senior academic.

Zeger Degraeve, dean of Prince Mohammed Bin Salman College of Business & Entrepreneurship, emphasized the importance of spreading development beyond Riyadh during an interview with Arab News on the sidelines of the Human Capability Initiative in the capital.

“Economic development of the Kingdom outside of the capital city of Riyadh is critical,” Degraeve said. “That still is the intent of KAEC. It’s also the intent of NEOM… you have to bring the whole city along in an economic development process, the whole country.”

He drew parallels with the UK, pointing to regional disparities as a factor in Brexit. “It’s one of the reasons for Brexit, for instance, because of the imbalance in economic development between London and the rest of the UK,” he added.

Degraeve also underscored the role of education in driving sustainable growth, noting that the sector is key to preparing young Saudis for leadership and innovation in a diversified economy.

“Education is a critical strategic sector in Saudi Arabia, with 36 million people and 70 percent below 30,” he noted. “There’s an enormous market that underlines the importance of the sector.” 

MBSC is experiencing rapid growth in student enrollment, signaling strong demand for high-quality academic programs aligned with Saudi Arabia’s evolving economic landscape.

“Four years ago, we graduated 40 students and the next year we graduated 100 students. That was already two and a half times the size of the school,” said Degraeve. “But the year after we graduated 320 students… and this year we have graduated 480 students.”

“That’s an enormous growth which shows the market interest in premium business education in the Kingdom,” he added.

Degraeve credited the surge to the Kingdom’s Vision 2030 initiative, which he said has inspired young Saudis to seek world-class business education that equips them for a dynamic future.

“It is Vision 2030,” he said. “The Saudi youth is really inspired by the business future of the Kingdom… and they are looking for good world-class business education. Prince Mohammed Bin Salman College provides that alternative.”

In response to rising demand across the country, MBSC has expanded its reach through regional partnerships and diversified program delivery.

“Since 2021, we work in partnership with STC Academy to offer our executive MBA program, or Master in Management and a Master in Finance programs here in Riyadh,” Degraeve said.

He continued: “Through Riyadh, we have access to Dammam as well. We are offering programs in KAEC also, which allow us to access Makkah and Madinah.”

The college’s modular program format has also made it easier for working professionals to pursue advanced education without stepping away from their careers.

“It’s a format where students fly in, stay for four days in the program, four days per month over the weekend, and then they are back in the full-time employment,” he explained.

Degraeve emphasized that MBSC’s mission is closely aligned with the Kingdom’s drive to unlock new economic value and diversify its economy.

“The main aim of Vision 2030 is diversification of Saudi’s economy,” he said. “You diversify an economy by taking many, many, many initiatives, value-creating initiatives in a wide range of businesses and industries.”

“Prince Mohammed Bin Salman College develops leaders,” he added. “Leaders do essentially two things… they think about new value-creating initiatives… but that’s not sufficient. Leadership also requires us to act. We sharpen… our students’ execution skills.”

To date, the college has graduated more than 1,200 students, whom Degraeve described as “leaders for the future of the Kingdom.”

He also stressed the importance of preparing students for success on the global stage.

“Actually, we have a duty. It’s a responsibility for us to connect with international organizations,” he said.

Degraeve added: “We make them especially effective to work in Saudi Arabia and the Middle East region… but business is a global activity.”

MBSC has partnered with leading international institutions, including Babson College in the US and Oxford University in the UK, to strengthen its global outlook and educational offerings.


Saudi Arabia continues to leverage AI to propel mining sector, says Alkhorayef

Updated 13 April 2025
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Saudi Arabia continues to leverage AI to propel mining sector, says Alkhorayef

RIYADH: Saudi Arabia is investing in artificial intelligence to drive growth in the mining sector, according to the Kingdom’s minister of industry and mineral resources. 

Speaking in a fireside chat titled “Human Potential – The Critical Foundation of Industrial Transformation” on the first day of the Human Capability Initiative 2025 taking place in Riyadh on April 13-14, Bandar Alkhorayef explained that this focus is significant given that mining is often viewed as a traditional industry where innovation has lagged. 

This falls in line with Saudi Arabia’s goal to increase the mining industry’s gross domestic product contribution from $17 billion to $75 billion by 2035. 

It also aligns well with the nation’s efforts to establish mining as the third pillar of its industrial economy. 

During the session, Alkhorayef said: “When we launched our Future Mineral Form three years ago, actually in this center, we had a small zone that we called tech zone where we invited different innovators from around the world to showcase some of their ideas. It was amazing to see how small ideas can actually be accommodated in the mining sector from up to upstream in mines, for example, where we can see more safer mines, more productive and more energy efficient mines, and so on.” 

He added: “So, in industry, it’s the same thing. We believe that Saudi Arabia has a great advantage in terms of our energy efficiency. Also, AI needs a lot of energy, as you can imagine, and we are spending a lot of money to create the infrastructure to build AI, to build data centers, to allow also the investors to come at the same time.” 

The minister went on to highlight significant regulatory efforts — from cybersecurity to broader frameworks — that enable artificial intelligence to operate safely and under strong governance. 

“We have a program that we launched two years ago in the ministry called the Future Factories Program where we incentivize industry investors to tap into new technologies, robotics, or AI,” Alkhorayef said.

He added: “When we look at the industry and mining coupled with the human capital development program, the RDI, the Research, Development and Innovation Program, it creates an ecosystem where talent-based human capital is developed, where we are creating opportunities for the young in the form of jobs but also creating opportunities in the form of actual investment or building the next interpreters.” 

Regarding the Human Capital Development Program, the minister emphasized that it is a key national asset. He noted that the ministry is working to ensure strong coordination between the program and the industrial and mining sectors, as it addresses the broader needs of the nation. 

“Today’s world is moving so fast, and it is very hard for sectors on their own to be responsible for the agility in a cost-cutting element of the economy, which is education and training and skilling and reskilling. So, I think that it’s a great asset for us because it allows us to focus on our own plans where we are at the same time very confident that there is a great effort with great coordination for the sector to have the right talent in place for us to achieve our targets,” Alkhorayef said. 

The two-day event unites government entities, the private sector, and nonprofit organizations to foster collaboration and drive innovation. 

Organized by the Human Capability Development Program — a part of the Vision 2030 realization initiatives — in partnership with the Ministry of Education, the conference is expected to explore breakthrough learning models and strategies for future workforce readiness. 

HCI 2025 will host over 100-panel discussions across four main stages, focusing on key future trends in developing human potential. It will explore innovative methods to empower individuals and communities while fostering stronger public-private sector collaboration to create sustainable and impactful solutions for the future.


Human capital is Saudi Arabia’s ‘strongest driver of wealth,’ says economy minister

Updated 13 April 2025
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Human capital is Saudi Arabia’s ‘strongest driver of wealth,’ says economy minister

RIYADH: Saudi Arabia must fundamentally transform how it develops its people to remain globally competitive in a rapidly evolving economy, according to a Saudi minister. 

During the Human Capability Initiative in Riyadh, Minister of Economy and Planning Faisal Al-Ibrahim emphasized the critical role of talent in developing economies.  

“Countries don’t succeed because of fortune. They succeed because of decisions — hard, deliberate, long-term decisions,” Al-Ibrahim said.  

“The smartest decision any nation can make in any era under any circumstances is to invest in its people.”  

Framing human capital as a core pillar of national strength, Al-Ibrahim described talent — not natural resources — as the true multiplier for growth.  

“Land may contain oil, but only people create value. Infrastructure may enable trade, but only talent drives innovation. And technology may open doors, but only a capable workforce can walk through them,” he said, warning that economies failing to reform their education and workforce systems will struggle to compete.  

“Human capital is the strongest driver of national wealth in advanced economies. It fuels productivity, and in countries that still rely heavily on natural resources, it is the untapped advantage and the growth multiplier,” he said.  

Al-Ibrahim emphasized that while traditional skills and credentials remain vital, they are insufficient without leadership.  

“I’m not talking about the formal kind (of leadership) that comes with position or seniority, but the quiet kind that shows up in decisions, merit, and responsibility,” he said.  

“We’ve produced engineers who can calculate, developers who can code, analysts who can optimize, but how many can challenge, persuade, inspire?”  

He cautioned that the failure to prioritize leadership development would hinder national progress.  

“This is not a soft skill, it’s a hard requirement,” Al-Ibrahim stated.  

“In a volatile world, leadership is the scarce resource that sets nations apart. And unless we build systems that deliberately grow it, we will keep falling short, even when everything else looks great on paper.”  

Citing Crown Prince Mohammed bin Salman as a national model, Al-Ibrahim said that His Royal Highness “Is not only leading reform. He is redefining what leadership means in this era — bold, energetic, laser-focused. He doesn’t manage for the status quo. He moves with vision and urgency, exactly what this moment demands and exactly what we must multiply.”  

Five forces for reform  

Al-Ibrahim outlined five structural forces driving the urgency for human capital reform.  

First, he highlighted that automation and artificial intelligence are no longer future concerns — they are already transforming industries and displacing routine work.  

“Education systems built for routine and stability are no longer fit for purpose,” he said.   

Second, Al-Ibrahim stressed that “every job is now a digital job,” making digital fluency as fundamental as literacy and numeracy.  

“Falling behind in digital skills is not an inconvenience — it is economic jeopardy,” he said.  

Third, demographic realities require urgent responses. In countries with aging populations, continuous retraining is essential to sustain output.  

In youthful economies like Saudi Arabia, he posed a critical point: “The question is, will youth find systems and jobs that match their potential, or will that potential go unused and eventually be lost?” 

Fourth, the job market is evolving beyond degrees. “Employers are no longer hiring credentials. They are hiring capability,” he said.  

The mismatch between educational output and labor market demand is “a growth killer.”  

Fifth, Al-Ibrahim addressed talent mobility amid global instability.  

“High-skilled professionals are looking for stable homes, places they can thrive and build,” he said.  

“This is a real opportunity for the Kingdom of Saudi Arabia. If we build attractive environments with clear pathways, inclusive communities, and forward-thinking policies,” he added.   

A strategic action plan  

To meet these challenges, Al-Ibrahim laid out four strategic actions: realigning education with labor market needs, elevating vocational education, institutionalizing lifelong learning, and fostering deep collaboration between government, business, and academia.  

“We must drastically realign education and the economy,” he said.  

He added: “Curriculum must be shaped by real labor market data in partnership with employers. Fields like AI, climate tech, logistics, tourism, and digital finance are all expanding—our classrooms should reflect that today, not five years from now.”  

Vocational and technical training, he stressed, must be integrated into national strategy.  

“Too many systems still treat hands-on careers as a second choice. That is a mistake—and it’s an expensive one,” he said. “Vocational education is economic infrastructure.”  

Lifelong learning, Al-Ibrahim said, must become standard policy. “People entering the workforce today will need to re-skill again and again,” he said, calling for co-investment by government and employers to support ongoing learning as a shared responsibility.  

Finally, he called for a systemic, long-term approach to collaboration. “No one can do this alone—not government, not business, not academia,” he said.  

“When we align incentives, share accountability, and build for the long term, we don’t just produce the skills we need—we produce competitive advantage,” he added.   

He highlighted that Saudi Arabia is already moving in this direction under Vision 2030.  

“Education systems are reforming. They now emphasize digital skills, entrepreneurship, and critical thinking. Vocational training is expanding. Women’s workforce participation is rising. Young Saudis are reshaping entire sectors,” he said.  

“All of this is supported by the Human Capability Development Program — a serious, systems-level investment in national talent.”  

He concluded that there is a challenge for policymakers globally. “Do we treat human capability as a headline or as the foundation? Do we prepare people to chase opportunity or to create it?”  

Al-Ibrahim reaffirmed the Kingdom’s commitment: “No matter how much we invest in infrastructure or technology, there is no return without the right people to lead it. And those people don’t appear by chance—they appear because we chose early, clearly, and repeatedly to believe in them.”  

The second edition of the HCI, running from April 13 - 14 in Riyadh, brings together more than 300 global leaders and attendees from 120 countries to explore solutions for critical gaps in global skills and knowledge.  

Held under the patronage of Crown Prince Mohammed bin Salman, the event is hosted by the Human Capability Development Program in collaboration with the Ministry of Education.   

With the theme “Beyond Readiness,” HCI 2025 features over 100 panels, a high-level ministerial roundtable, and major international announcements. The event is part of Human Capability and Learning Week, running through April 16.