LONDON: For almost a decade, the image of Emirates has been intertwined with that of the double-decker jumbo jet, the Airbus A380.
It is an image that may need to be reviewed as doubts about the viability of the aircraft’s future mount.
“Emirates has not appeared likely to order anymore of the current A380. The A380 this year marks 10 years in service, so the aircraft’s design is getting old and thus efficiency is decreasing compared to newer aircraft,” said Will Horton, a senior analyst at Capa — Center for Aviation.
Launched in 2007, the A380 was at the cutting edge of technology due to its size and passenger comfort, with the plane able to carry more than 500 passengers on long-haul flights. The Dubai-based airline was quick to snap up as many aircraft as it could, acquiring its first one in 2008.
Emirates became the largest buyer for the aircraft, and currently operates a fleet of 96 A380s, with a total order backlog of 46 planes.
Total Emirates A380 orders account for nearly half of all the 319 orders Airbus has received, according to the plane manufacturer.
Close to 10 years on, Emirates has started to slow down the rate of A380 orders and deliveries, having last placed an order for just two of the aircraft in 2016. This compares to the 50 A380s it ordered at the Dubai Airshow in 2013.
Now questions are being asked about whether the carrier will eventually abandon the A380, and if so, how will it be replaced.
At the end of 2016, Emirates deferred delivery of 12 A380s that were due for delivery over the next two years. In its half-year results released in July, Airbus revised down its A380 delivery schedule for 2019 from the planned 12 aircraft to just eight planes.
The possible demise of the A380 comes as the Middle East aviation market grapples with poor market conditions, where improving fleet efficiency is paramount for the region’s airlines.
Factors such as Brexit, the struggling oil and gas industry and the (now-lifted) ban on personal electronic devices on flights from some Middle Eastern airports into the US have been blamed for slowing down demand. Passenger traffic growth across all airlines in the Middle East slowed in the first half of this year, recording the slowest first half growth since 2003.
Emirates’ finances have also come under pressure. It made a round of job cuts this year, and in May it reported a 70 percent decline in profits for the financial year 2016-17 compared to the previous year.
Operating planes as big as A380s is no longer seen as a cost-efficient option. “Nothing will replace the A380 because airlines do not want to operate such a big jet because of its high cost, limited second-hand appeal and failure to operate at every airport. Emirates’ use of the A380 via its Dubai hub has been unique for moving people around, but that model doesn’t work for everyone,” said San Ahmad, chief analyst at StrategicAero Research.
The fate of the A380 could be decided at the Dubai Airshow in November, where the market waits to see what deals Emirates will strike with both the A380 manufacturer Airbus and with its US rival Boeing.
Airbus confirmed that no Emirates orders for A380s have been made so far this year, although there are campaigns currently running.
Emirates will also be considering whether to take up Airbus up on its new range of A380 enhancements being explored under its A380 development study.
At the Paris Air Show in June, Airbus showcased winglets that improve the plane’s fuel efficiency, allowing for up to 4 percent fuel burn savings. “Added to an optimized A380 maintenance program and enhanced cabin features, the overall benefit is a 13 percent cost per seat reduction versus today’s A380,” according to an e-mail from Airbus’ Africa and Middle East office.
These additions are seen as a compromise option to keep the A380 program going, as Airbus has so far rejected requests from Emirates to develop a new so-called A380neo aircraft.
“It (Emirates) would certainly order more (A380s) if Airbus were to strengthen the specification of the aircraft as the airline has been seeking,” said John Strickland, an aviation consultant at JLS Consultancy. “It’s also interested to order more if the new fuel-saving winglets proposed by Airbus could be retrofitted to some of its current fleet.”
Others are skeptical that the A380 program can be kept alive at all. “I’m really baffled by all of this talk of another order. They (Emirates) haven’t been taking the ones they have on order already. The only point of another order would be as a last-ditch effort to save a dying program,” said Richard Aboulafia, an aviation analyst at Teal Group.
“As their A380s retire, they will gradually be replaced by smaller twin jets,” he said.
Emirates declined to comment on any potential new orders.
If Emirates was to move away from the A380 model, one alternative is to further ramp up its already significant investment in Boeing’s 777x family. Emirates has 168 Boeing airplanes on order as of June 30, including 150 777Xs. Out of those 150, 115 are the large 777-9 aircraft that are seen as the latest rival to the A380.
Yet replacing A380s with the 777-9s will raise capacity problems for the airline, says Horton. Although still a large plane, the 777-9 model is not as big as the A380, meaning that Emirates would have to increase the number of flights leaving airports to maintain the same capacity. This could cause logistical issues trying to securing the right slots and the right time.
There are signs, however, that Emirates is changing its growth strategy, shifting toward providing more flights and greater frequencies by using smaller and more cost-efficient jets, said Ahmad.
“That will make them easier to fill, easier to shift on routes where airport restraints are in place and also drive down costs since each 777 or 787 flight will be a drop in the ocean compared to the A380,” he said.
The tie-up with FlyDubai announced last month is evidence of this strategy, said Strickland. “It’s also likely that the planned partnership with FlyDubai will increase network flexibility due to the latter using smaller Boeing 737-800s and 737max aircraft,” he said.
The pact between the two airlines gives Emirates greater access to narrow-body planes, and it could help the pair reduce costs by eliminating duplicate routes.
Emirates faces tough decisions over the future of the A380
Emirates faces tough decisions over the future of the A380
Saudi Arabia unveils 38% spending increase in 2025 budget to drive Vision 2030 progress
RIYADH: Saudi Arabia has increased government spending by 38 percent in its 2025 budget, reflecting the Kingdom’s commitment to achieving the objectives of Vision 2030.
The announcement was made by Finance Minister Mohammed Al-Jadaan following the budget’s approval.
Al-Jadaan explained that the 2025 budget is designed to continue strategic investments in developmental projects, aligning with sectoral strategies and programs under Saudi Vision 2030.
On Tuesday, Saudi Arabia approved its state budget for the fiscal year 2025, with projected revenues of SR1.18 trillion ($315.73 billion) and expenditures of SR1.28 trillion, resulting in a deficit of SR101 billion.
The minister emphasized that the government remains dedicated to projects that promote sustainable economic, social, and environmental benefits. These include improving the business environment, boosting the trade balance, and increasing both local and foreign investments.
“We identified that the nominal GDP has achieved greater growth from 2015 to 2023,” Al-Jadaan said during a press conference on the budget.
He also highlighted the growing contribution of non-oil sectors to the country’s GDP. “The contribution of non-oil activities to the gross domestic product increased from approximately 47 percent in 2016 to around 52 percent by the end of the first half of 2024,” Al-Jadaan noted, adding that such a shift was “extremely challenging to achieve within six years, as structural economic transformation does not occur in one or two years.”
The finance minister reaffirmed that the government continues to prioritize citizens' basic needs, with a focus on education, health, and social services. “There is a continued approach of planned expansion by the government to improve services provided to citizens and enhance the quality of these services. This expansion focuses on accelerating strategies with significant economic impact on jobs, business opportunities, and the sustainability of the Saudi economy,” he said.
He also reiterated the government’s commitment to completing ongoing projects, integrating technology and infrastructure into the broader economic system.
Al-Jadaan expressed optimism regarding the Kingdom’s economic indicators. “Economic indicators call for optimism, and non-oil GDP helped (overall) GDP continue to grow,” he remarked.
The minister clarified that the projected deficit in the 2025 budget aligns with the government’s financial planning framework, stating that Saudi Arabia plans to continue both local and international financing operations to cover the deficit and meet its debt obligations.
He also noted that the Kingdom is focusing on alternative financing methods to bolster economic growth, particularly through strategic spending on Vision 2030 programs. “The 2025 budget aims to maintain the Kingdom’s financial position and achieve fiscal sustainability by preserving manageable public debt levels and substantial government reserves,” Al-Jadaan explained.
“Debt levels in Saudi Arabia remain lower than those of most countries in the G20,” he added.
Al-Jadaan confirmed that government reserves are expected to remain stable at around SR390 billion by the end of 2025.
The finance minister also discussed the role of various sectors in driving economic growth. “The industrial sector is extremely important for several reasons, the foremost being national security. Having a robust industrial base means reducing exposure to external risks,” he said.
He further emphasized that exports and job creation within the industrial sector enhance the country’s balance of payments and support the broader economy.
Al-Jadaan highlighted tourism as another key sector contributing to job creation and economic stability. “Tourism, both in Saudi Arabia and globally, is one of the largest sectors contributing to job creation in the economy. It is also among the key sectors that significantly support the balance of payments,” he said. He noted that investments are being directed towards tourism projects and services across the Kingdom.
The transportation and logistics sectors were also emphasized as essential to the Kingdom's economic future. Al-Jadaan pointed out that a robust logistics infrastructure is crucial for the success of the industrial sector. “The transportation and logistics sector also has direct benefits, including the creation of logistics hubs that capitalize on Saudi Arabia’s central location, connecting three continents and serving as a strategic global crossroads,” he stated.
Turning to the energy sector, Al-Jadaan clarified that Saudi Arabia’s energy strategy encompasses much more than oil. “When discussing the energy sector, I am not referring solely to oil. I am speaking about the broader concept of energy, including renewable energy, gas, gas networks, and their delivery to industrial zones across the Kingdom,” he said.
He also discussed progress in the military sector, noting that the Ministry of Defense has completed its 10-year plan, with implementation already underway.
“The military sector has seen significant progress, with the Ministry of Defense completing its 10-year plan and the military sector now moving forward with its implementation,” Al-Jadaan explained.
Addressing the broader global economic landscape, Al-Jadaan assured that the Kingdom is maintaining stability despite external challenges. “Inflation in the Kingdom is under control despite its rise globally,” he said.
On public finances, the finance minister highlighted the role of Saudi Aramco in supporting government revenue. “Public finances in Saudi Arabia receive main sources of revenue, one of which comes from oil through the Aramco company. The first source is called the ‘royalty,’ which is a well-established concept with international standards. In Saudi Arabia, the royalty rate is set at 15 percent of Aramco’s oil sales,” he said. He also pointed out that Aramco is required to remit 50 percent of its profits to the government.
Al-Jadaan also touched on government efforts to control fuel prices, stating that billions are being spent to prevent price hikes. “When the Saudi government listed Aramco shares on the financial market, it had several objectives, all of which have been achieved. These included enhancing transparency, monetizing some of these assets, and utilizing the proceeds to support ongoing economic initiatives,” he said.
Finally, when discussing major infrastructure projects such as NEOM, Qiddiya, Diriyah Gate, and the Red Sea Project, Al-Jadaan emphasized that these initiatives have dedicated companies with their own budgets. “These companies have budgets allocated from the sovereign fund, not from the public treasury. They spend based on these budgets and they’re held accountable accordingly,” he stated.
Addressing inflation, Al-Jadaan clarified: “There is no officially targeted inflation rate in Saudi Arabia. However, globally, an inflation rate of 2 percent or 3 percent is considered acceptable.”
In conclusion, Al-Jadaan reaffirmed that the Saudi economy remains on a positive trajectory thanks to the government’s proactive policies and long-term planning, positioning the Kingdom to navigate both local and global challenges effectively.
Saudi Arabia’s Diriyah Co. set to attract new wave of investors with $500m ticket sizes
RIYADH: Saudi Arabia’s Diriyah Co. is attracting a new wave of global investors with potential ticket sizes of $500 million or more, according to the company’s investment head.
Speaking to Arab News during the World Investment Conference in Riyadh, Chief Investment Officer Jonathan Robinson revealed ongoing discussions with international investors spanning Asia, Europe, the Americas, and the Middle East, signaling an unprecedented level of global interest in the company’s projects.
“How many investors? We have dozens of live conversations, dozens, so we’re not talking one or two and we’re not talking one or two in any particular jurisdiction. We have conversations going across all these jurisdictions,” Robinson revealed.
“What’s the size? I think look, you know, we’re probably talking about investments, certainly in the $500 million and up. So it’s a good size, with international investors across multiple continents to come in, in a way, as a co-investor that I don’t think we’ve really seen in terms of breadth and depth or scale so far in the giga-project. So this is an exciting time. It is very real. And I think you will see those kinds of announcements coming out of Diriyah in the coming months,” he added.
“We have live conversations today, with investors in Asia, with investors in Europe, with investors in the Americas, as well as the many conversations that are ongoing across the region and including, of course, in Saudi Arabia,” Robinson said.
“I think in the coming months, you will see us make some pretty exciting announcements about partnerships with that global investor space. And that’s going to be groundbreaking in some respects. Not just for Diriyah, but potentially even for the Kingdom of Saudi Arabia, where you’re going to see a real level of participation joining us as partners and joint ventures in funds, through sole developer, co-developer models, where you’re going to see us partnering with some pretty new names,” Robinson said.
He elaborated on the breadth of investor engagement, highlighting that these partnerships will involve new and established players in Saudi Arabia.
“Some of them will be new names to the Kingdom. Some of them will be existing investors in the Kingdom but looking to step up that game. We’re moving our execution model now to one that’s really engaging with the private sector on this global scale, and those are very live conversations today,” Robinson explained.
“I think you will see coming out of Diriyah in the coming months, certainly into the first quarter of next year, we’ll be in a position to make some pretty big announcements. And those will include investors coming from all three continents,” he added.
Robinson described the initiative as a groundbreaking development for Saudi Arabia’s giga-projects. “I think it’s groundbreaking, first and foremost, that we’re bringing foreign investors in to co-invest in some of our giga-projects. That is groundbreaking. It’s been done at some level through operating companies and what have you, but as investors to co-invest in the development, ownership, operation, that will be groundbreaking,” he said.
Saudi Arabia, Iraq, and Russia reaffirm OPEC+ production cuts commitment
RIYADH: Saudi Arabia, Iraq and Russia on Tuesday emphasized the importance of fully committing to the OPEC+ oil supply agreement, including voluntary production cuts agreed by eight member states and measures to compensate for any increases in production, the Saudi Press Agency reported.
According to SPA, a trilateral meeting was held this morning in Baghdad, Iraq’s capital, which was attended by Saudi Energy Minister Prince Abdulaziz bin Salman, Russian Deputy Prime Minister Alexander Novak and Ali Maarij Al-Bahadli, Iraq’s director of distribution affairs at the Ministry of Oil.
The participants reaffirmed the significance of continued cooperation among OPEC+ countries and their full commitment to the voluntary agreements and production cuts, including those agreed upon by the eight countries, as well as compensating for any production increases.
Al-Bahadli reiterated Iraq’s determination to fully adhere to the agreement, voluntary cuts, and compensation for any production increase, in line with the updated schedule submitted by Iraq to the OPEC Secretariat.
Oil prices rose on Tuesday, steadying after falling more than $2 a barrel in the previous session on reports of a potential ceasefire between Israel and Lebanon’s Hezbollah.
Brent crude futures were up 53 cents, or 0.7 percent, at $73.54 a barrel as of 1231 GMT. US West Texas Intermediate crude futures were at $69.46 a barrel, up 52 cents, or 0.75 percent.
Prices fell sharply on Monday after multiple reports that Israel and Lebanon had agreed to the terms of a ceasefire in the Israel-Hezbollah conflict. A senior Israeli official said Israel looks set to approve a US plan for a ceasefire on Tuesday.
Saudi Arabia approves FY2025 budget, forecasts $27bn deficit amid expansionary spending
RIYADH: Saudi Arabia on Tuesday approved the state budget for fiscal year 2025 with revenues projected at SR1.18 trillion ($315.73 billion) and expenditure at SR1.28 trillion, leading to a deficit of SR101 billion.
The Finance Ministry forecasted Saudi Arabia’s Real GDP growth at 4.6 percent in 2025, up from the 0.8 percent estimate for 2024. This growth will be driven by a rise in non-oil sector activities, according to the statement.
The figures align with projections from the ministry’s pre-budget statement in September, showing a 4 percent decline in revenues, a 4 percent decline in expenditures, and a 12 percent lower deficit compared to the latest FY 2024 estimates.
The FY2025 forecast are based on a baseline scenario, which represents a middle ground between higher and lower revenue projections, taking into account potential changes in economic activity and global petroleum market conditions.
The ministry projects the deficit to remain at similar levels in the medium term, with SR130 billion in 2026 and SR140 billion in 2027, driven by the government’s strategic expansionary spending policies aimed at fostering economic diversification and sustainable growth. Revenues are expected to rise over the next two years, reaching around SR1.3 trillion by 2027.
The Kingdom’s total debt is projected to reach SR1.3 trillion in 2025, equivalent to 29.9 percent of GDP, reflecting a sustainable level to meet financing needs.
Revised projections for Saudi Arabia’s 2024 budget indicate a deficit of SR115 billion, with total debt expected to reach SR1.2 trillion, or 29.3 percent of GDP.
The fiscal year 2025 budget prioritizes maintaining essential services for citizens and residents, while accelerating spending on key projects and sectors.
It focuses on preserving fiscal stability and achieving long-term sustainability by managing government reserves and maintaining sustainable public debt levels, ensuring the Kingdom’s resilience against unforeseen economic shocks.
In a statement following the weekly Cabinet session, Crown Prince Mohammed bin Salman emphasized the government’s ongoing efforts to strengthen the Kingdom’s economic base. “We will continue to work on expanding the economic base and enhancing the Kingdom’s financial position,” he stated.
He also highlighted the pivotal role of Saudi Arabia’s sovereign wealth funds—the Public Investment Fund and the National Development Fund—in driving economic stability and achieving Vision 2030 objectives. “These funds are essential to diversifying the economy and supporting long-term investments,” he said.
Saudi Arabia’s economy is advancing through strategic reforms and robust investment initiatives under Vision 2030, emphasizing diversification and fiscal sustainability.
Key objectives include increasing the private sector’s contribution to GDP, growing the share of foreign investment, and boosting non-oil exports.
The strategy also prioritizes reducing unemployment and accelerating investment growth by enhancing the business environment, providing innovative financing solutions, and attracting regional headquarters of multinational companies to establish a strong presence in the Kingdom.
Key enablers, including the PIF, are driving private sector growth, launching transformative projects, and fostering new industries.
These efforts, outlined in the 2025 budget statement, aim to boost social and economic outcomes while ensuring resilience against global challenges and long-term prosperity.
Breakdown of projected government revenues and expenditures
The ministry projects tax income at SR379 billion in 2025, making up around 32 percent of total revenues. This represents a 4 percent increase compared to the 2024 estimates. The majority of these levies, accounting for 77 percent, come from taxes on goods and services.
According to the ministry, this growth is driven by sustained improvements in economic activity, the ongoing development of tax administration, and enhanced collection processes, all of which have contributed to a boost in total tax revenues.
In terms of sector-specific expenditures, the military sector received the largest allocation at SR272 billion, marking a 5 percent increase compared to the 2024 estimates.
The health and social development sector followed with a 20.25 percent share amounting to SR260 billion.
General items with 14.95 percent share of 2025 budgeted expenditures will be allocated SR192 billion.
Financing the deficit
The Ministry of Finance, in collaboration with the National Debt Management Center develops an annual borrowing plan aligned with the Kingdom’s medium-term debt strategy, ensuring long-term debt sustainability.
This strategy not only diversifies financing sources, encompassing both domestic and external markets, but also enhances the Kingdom’s standing in global debt markets.
Additionally, the government is expanding its financing channels by tapping into bond and sukuk issuance, loans, and alternative funding models like project and infrastructure financing, as well as collaborating with export credit agencies.
According to the Ministry of Finance, the Kingdom maintains a robust fiscal position, underpinned by substantial financial reserves and manageable public debt levels.
This fiscal strength provides the government with the ability to manage potential economic shocks and meet its financing needs across short, medium, and long-term horizons, while securing favorable borrowing terms from both domestic and international markets.
The crown prince also reaffirmed the government’s commitment to fiscal reforms that have already improved Saudi Arabia’s credit ratings. While the projected deficit for 2025 signals short-term fiscal challenges, the government is focused on ensuring long-term economic sustainability.
He noted that this year’s budget will continue to prioritize economic diversification, with significant emphasis on empowering the private sector and fostering growth in small and medium-sized enterprises.
The crown prince stressed that, despite global economic uncertainties, Saudi Arabia is well-positioned to navigate external challenges and play an increasingly central role in regional and global economic stability.
“Our economy is well-prepared to overcome challenges,” he said.
He also emphasized the importance of long-term financial planning to maintain momentum on Vision 2030 initiatives, underscoring the government's focus on spending efficiency and transparent execution of the budget to meet its strategic goals.
Moody’s upgraded Saudi Arabia’s credit rating to “Aa3” from “A1” on Friday, highlighting the country’s progress in diversifying its economy beyond oil.
The Kingdom is investing heavily in Vision 2030 initiatives, focusing on sectors like tourism, sports, and manufacturing, while also attracting foreign investment.
Despite lower oil prices and reduced production, Saudi Arabia continues to adjust its spending, delaying or scaling back some Vision 2030 projects while prioritizing others.
Moody’s revised the country’s outlook to stable, reflecting uncertainties in global economic conditions and the oil market. In September, S&P also upgraded Saudi Arabia’s outlook to positive due to strong non-oil growth.
Closing Bell: Saudi main index closes in red at 11,736
RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Tuesday, with the index shedding 51.65 points to close at 11,736.07.
The total trading turnover of the benchmark index was SR5.15 billion ($1.37 billion) with 54 of the listed stocks advancing, while 179 declined.
The Kingdom’s parallel market Nomu also slipped by 0.85 percent to 30,602.83, while the MSCI Tadawul Index inched down by 0.22 percent to 1,474.39.
The best-performing stock on the main market was Riyadh Cables Group Co., with its share price surging by 7.56 percent to SR128.
Media giant MBC Group’s share price soared by 6.83 percent to SR50.80, while the stock price of Elm Co. increased by 4.03 percent to SR1,105.
Conversely, the share price of Jadwa REIT Saudi Fund slipped by 5.12 percent to SR10.38.
On Nomu, the top gainer was Miral Dental Clinics Co. The firm’s share price increased by 14.63 percent to SR113.60.
In announcements, the Saudi Investment Bank stated that it has completed the debut offering of its $750 million dollar-denominated Tier 1 Sustainable Sukuk, issued under its $1.5 billion Additional Tier 1 Sukuk Program.
The bank confirmed that the offering will be settled on Nov. 27, and the sukuk will be listed on the London Stock Exchange’s International Securities Market.
SAIB’s share price rose by 0.57 percent on Tuesday, closing at SR14.04.
Saudi Reinsurance Co. announced that it has received approval from the Kingdom’s Capital Market Authority to increase its capital by offering 26.73 million shares, while suspending preemptive rights, at a value of SR427.68 million.
The reinsurance firm’s share price increased slightly by 0.11 percent to SR45.50.
Tamkeen Human Resources Co. stated that it will begin trading on Saudi Arabia’s main market on Nov. 27.
The daily and static fluctuation limits for the company’s stocks will be set at 30 percent and 10 percent, respectively, during the first three days of trading.
From the fourth day, the daily price fluctuation limits will revert to ±10 percent, and the static price fluctuation limits will no longer apply.
