LONDON: Emirates has secured the future of the Airbus A380 — at least for now — with an order for 36 of the superjumbos, it emerged on Thursday.
But only 20 are firm orders and the European aircraft maker will likely get “significantly” less than the list price of $16 billion, analysts told Arab News.
Tim Coombs, airlines specialist at Aviation Economics, said Airbus “had been quite clear that the production line would have closed without an order from Emirates.”
That in itself would have markedly increased the Gulf carrier’s bargaining position.
When asked if the discount could have been struck at or below 40 percent, Chris Tarry, airlines analyst at CTAIRA, told Arab News: “I wouldn’t disabuse you of that.”
Discounts for orders from Airbus and Boeing are not uncommon, but the size of concessions are rarely disclosed.
Tarry said: “I am sure Emirates was able to secure a particularly attractive price for the additional aircraft.”
A dearth of orders had cast doubts on the future of the A380 program with Chief Operating Officer John Leahy saying a few days ago that production would have ceased without a further commitment from Emirates. The airline is by far Airbus’s largest customer for A380s, with 101 deliveries in the past 10 years.
With the latest deal, the A380 could continue now for “at least another 10 years,” said Leahy in an Airbus statement on Thursday.
A major issue for the future of the four-engined A380 has been that twin-engined aircraft have been getting bigger and flying further. Instead of airlines flying to hubs such as Dubai, there is a greater choice of jets to carry travelers direct to their destinations, said Coombs.
Chris Bryant, Berlin-based columnist for Bloomberg, wrote on the news organization’s website that the A380 had always seemed the ideal solution to the problem of increasingly congested airports.
“Yet, in reality, airlines are increasingly shunning the big hubs and flying point-to-point instead, thanks in part to a new generation of fuel-efficient jets,” said Bryant.
The latest Emirates/A380 contract comes in the form of a memorandum of understanding that allows a buyer to pull out under certain conditions, and is often not legally binding.
Some of the new A380s, which will begin to be delivered from 2020, will be replacements for the oldest of the wide-bodied aircraft, Emirates said in a statement.
It is not known if these new orders will encompass an upgraded version of the superjumbo — dubbed the A380plus — which adds fuel-saving winglets and room for 80 more passengers.
“I’m personally convinced more orders will follow Emirates’ example and that this great aircraft will be built well into the 2030s,” said Leahy.
Already by far the biggest A380 customer, Emirates has repeatedly stalled on a deal, putting the aircraft’s future in doubt after Airbus failed to win new orders for two years.
There were gasps at the Dubai Air Show in November when Emirates unveiled a provisional $15.1 billion order for 40 of Boeing’s mid-sized wide-body 787-10 jetliners instead of announcing an expected deal with Airbus for more A380s.
Airbus had warned in 2016 that 10 years after entering service, its A380 production line would have dwindled to 12 a year in 2018, and eight in 2019.
After Thursday’s deal, continued production is secured for the time being, but analysts cautioned that further big orders were unlikely. Tarry commented: “Should we expect lots more orders in the near term? Certainly not,” he said.
Emirates Chairman Sheikh Ahmed bin Saeed Al-Maktoum said: “Some of the new A380s we’ve just ordered will be used as fleet replacements. This order will provide stability to the A380 production line.”
He added: “We will continue to work closely with Airbus to further enhance the aircraft and onboard product, so as to offer our passengers the best possible experience. The beauty of this aircraft is that the technology and real estate on board gives us plenty of room to do something different with the interiors.”
Emirates said the A380 is an essential part of the solution to sustainable growth, alleviating traffic congestion at busy airports by transporting more passengers with fewer flights. The carrier was said to be the best way to capture growing world air traffic, which doubles every 15 years. The A380 flies 8,200 nautical miles (15,200 kilometers) non-stop and can accommodate 575 passengers in four classes.
Leahy said: “This aircraft has contributed enormously to Emirates’ growth and success since 2008 and we are delighted that it will continue to do so.”
Emirates throws A380 a lifeline with $16bn order at eleventh hour
Emirates throws A380 a lifeline with $16bn order at eleventh hour
Banking sector in Kuwait, Qatar and UAE to stay stable in 2025: S&P Global
RIYADH: Banks in Kuwait, Qatar, and the UAE are expected to maintain stability in 2025, supported by strong capital buffers, favorable economic conditions, and supportive government policies, according to a new analysis.
In Kuwait, S&P Global forecasts improved asset quality, driven by a stronger economy and lower interest rates.
The banking sector is well-positioned to deal with potential geopolitical stress in the region, with stronger lending growth offsetting the negative impact of lower interest rates on profitability, it added.
S&P Global’s analysis echoes the views shared by Fitch Ratings in November 2024, which stated that the standalone credit profiles of Islamic banks in Kuwait are expected to remain stable in 2025, supported by favorable operating conditions.
“After an estimated 2.3 percent contraction in 2024, we expect Kuwait’s GDP growth will rebound to 3 percent in 2025 as OPEC+ oil production restrictions are gradually eased, and project implementation and reform momentum improves,” said Puneet Tuli, S&P Global Ratings credit analyst.
The report added that accelerated reforms following last year’s political changes could improve the pace of reform and growth prospects for the economy, “which in turn would support higher lending growth for the banking system.”
According to the report, the credit losses in the Kuwaiti banking sector are approaching cyclical lows.
S&P Global added that banks are likely to resort to write-offs to limit the rise in the nonperforming loan ratio, supported by strong provisioning buffers.
The analysis further noted that banks in Kuwait operate with robust capital buffers and typically retain 50 percent or more of their profits, which supports their capitalization.
The US-based agency also highlighted that Kuwaiti banks’ funding structures benefit from a solid core customer deposit base and a net external asset position.
“Deposits from government and public institutions have experienced some volatility in the past, as these entities seek to diversify their deposits among local and foreign banks. However, we believe that government support to systemically important banks will be forthcoming if needed,” said S&P Global.
It added: “Private sector deposits from corporations and households have been stable and dominate Kuwaiti banks’ funding base.”
Qatar’s outlook
In Qatar, S&P Global expects continued strong performance for banks in 2025, driven by strong capitalization and ample liquidity. The rise in liquefied natural gas production, along with its impact on the non-hydrocarbon economy, is expected to support credit growth in the next two to three years.
The report added that local funding sources will play an increasing role in supporting credit growth among Qatari banks, driven by slower public sector deleveraging.
S&P Global also noted that the Qatari government’s strong support for its banking sector is expected to mitigate the risk of external debt outflows in the event of escalating geopolitical risks.
“Geopolitical tensions in the Middle East are high but we currently do not expect a full-scale regional conflict, and we anticipate macroeconomic conditions in Qatar will remain broadly stable,” said S&P Global Ratings credit analyst Juili Pargaonkar.
Forecast for the UAE
In the UAE, S&P Global forecasts improved asset quality metrics and lower credit losses in 2025, driven by a robust domestic economy.
The agency expects banks in the emirates to maintain strong capital buffers, robust funding profiles, and continued government support in 2025, which will underpin their resilience.
The analysis also noted that banks in the UAE have experienced a significant increase in deposits over the past three years, which will help sustain their strong growth momentum in 2025.
“Deposit growth has improved in recent years as private corporations and retail depositors prioritized saving over spending, and higher interest rates provided better yields on deposits,” said S&P Global.
It added: “We expect strong deposit growth to continue through 2025, given the non-oil economy remains supportive, leading to stronger cash flow generation from corporations.”
Saudi domestic tourism driving travel sector growth, Almosafer CEO says
RIYADH: Saudi Arabia’s domestic tourism is fueling a significant expansion in the Kingdom’s travel sector, with domestic bookings now making up over 40 percent of Almosafer’s overall travel market, according to CEO Muzzammil Ahussain.
This growth is underscored by a 45 percent year-on-year increase in domestic flight bookings in 2024, alongside a 39 percent rise in room night bookings, according to Almosafer’s latest travel trend report, released during the third Saudi Tourism Forum held in Riyadh.
The surge is linked to the country’s expanding tourism offerings and enhanced connectivity through low-cost carriers, with family and group travel seeing a particular boost, rising over 70 percent, the report added.
“The country has invested heavily in creating offerings and events to support domestic tourism,” Ahussain told Arab News on the sidelines of the event. “We see continued strength and sustainability in this, so we remain focused on domestic tourism.”
Almosafer, a Saudi travel company and part of Seera Group, is benefiting from this trend as domestic tourism becomes more sustainable. “In the report, over 40 percent of all of our bookings are now domestic,” Ahussain explained. “That doesn’t mean international travel is slowing down; overall travel is growing.”
He said flight prices dropped 7 percent year on year, prompting higher spending in destinations. “People are spending more on hotels, staying longer, and spending on experiences and events,” Ahussain said. “So overall, total spend is increasing.”
Despite the growth, challenges remain. Almosafer CEO said that the limited hotel supply during peak times, such as Riyadh season, leads to higher rates and makes it difficult for travelers to find accommodations.
“We’ve already seen a number of initiatives to improve hotel capacity and rooms across the country,” Ahussain said, adding that such improvements would make domestic tourism more attractive at all levels, from luxury to economy.
The company’s ongoing efforts to enhance partnerships with regional authorities and airlines are also key to this growth, and Almosafer said it collaborates closely with the Saudi Tourism Authority and regional bodies like the Aseer Investment Authority.
“We’ve had a number of signings at the Saudi Tourism Forum with different authorities from around the country to promote and market key destinations,” he added.
Ahussain also highlighted the strong partnerships Almosafer has with low-cost carriers like flynas and flyadeal, as well as its new partnership with Riyadh Air, which is set to launch later in 2025.
Looking ahead, Ahussain is optimistic about the impact of global events, such as Expo 2030 and the 2034 FIFA World Cup, on the Kingdom’s tourism sector. “These projects and events, as we saw with Expo 2020 Dubai, help build a brand for a city or country, and that brand creates awareness,” Ahussain said.
He continued: “When people come, whether domestically or internationally, we are working to build a foundation that supports them throughout their travel — before, during, and after these events.”
Almosafer is also preparing for an initial public offering as part of its long-term strategy, with a target IPO date in 2025 or 2026.
“In November 2023, Seera Group announced that Almosafer would be targeted for an IPO in two to three years,” he said.
“We’re still on track with that plan and working toward it.”
With domestic tourism growing rapidly, Almosafer is enhancing its digital offerings through partnerships aimed at streamlining travel services.
During the forum, Almosafer signed a memorandum of understanding with the Saudi Tourism Authority to integrate digital platforms, enhancing access to travel services.
Ahussain explained that the partnership also aimed to improve Sara Al, the smart guide for Saudi tourism, by adding booking services for flights and accommodations.
Egypt’s inflation drops to 23.4% in December amid falling food prices
- Banking sector shows strong resilience with record capital adequacy
RIYADH: Egypt’s annual inflation rate slowed to 23.4 percent in December 2024, down from 25 percent in November, according to figures from the Central Agency for Public Mobilization and Statistics.
The consumer price index for the country stood at 239.7 points in December, reflecting a deceleration largely driven by a drop in food prices.
Key food categories saw notable price decreases, with vegetables falling by 14 percent, dairy products, cheese, and eggs decreasing by 0.7 percent, fish and seafood dropping by 0.6 percent, and meat and poultry experiencing a slight reduction of 0.1 percent.
However, other sectors showed price increases, putting upward pressure on the overall inflation rate.
For example, telephone and fax services surged by 11 percent, fruit prices rose by 7.5 percent, and medical products, devices, and equipment saw a 5.5 percent increase.
Other notable price hikes included postal services (up 3.6 percent), hotel services (up 3.2 percent), and recreational and cultural services (up 2.8 percent).
Meanwhile, costs for telephone and fax equipment grew by 2.6 percent, while actual housing rentals increased by 1.6 percent. Hospital services saw a rise of 1.4 percent, with furniture, carpets, and floor coverings up by 1.3 percent.
Smaller price increases were recorded in oils and fats, electricity, gas, and fuel materials (up 0.7 percent), transportation services (up 0.5 percent), and basic foodstuffs like grains and bread (up 0.3 percent). Sugar and sugary foods, as well as private transportation costs, also saw slight increases of 0.2 to 0.3 percent.
Banking sector
Egypt’s banking sector continues to demonstrate stability and resilience, playing a vital role in maintaining the country’s economic, financial, and monetary stability, according to the Central Bank of Egypt’s latest Financial Soundness Indicators.
The sector’s capital adequacy ratio reached 19.1 percent by the end of Q3 2024, comfortably surpassing the regulatory minimum of 12.5 percent. This marks a 0.5 percent improvement from the previous period, highlighting the sector’s growing financial health.
In terms of asset quality, nonperforming loans represented just 2.4 percent of total loans, with provisions coverage for these loans standing at a strong 87.4 percent.
Liquidity levels remained robust, with local currency liquidity at 32.1 percent and foreign currency liquidity at 77.7 percent, well above the regulatory requirements of 20 percent and 25 percent, respectively.
The banking sector’s loan-to-deposit ratio was recorded at 61.3 percent by the end of Q3 2024, reflecting conservative lending practices. Meanwhile, profit margins remained impressive, with a return on equity of 32.2 percent for the 2023 fiscal year.
Saudi Arabia’s flynas begins Jeddah-Djibouti flights; flyadeal launches 5 routes
RIYADH: Saudi low-cost airline flynas launched its first direct flight between Jeddah and Djibouti on Jan. 8, further expanding its network in Africa.
According to a press statement, the inaugural celebration was held at King Abdulaziz International Airport and was attended by Djibouti’s Ambassador to the Kingdom Dya-Eddine Said Bamakhrama and representatives from flynas and Jeddah Airport Co.
The inaugural flight was welcomed at the African country by Faisal Al-Qabbani, Saudi Arabia’s ambassador to Djibouti, and Hassan Humad Ibrahim, theDjibouti’s minister of infrastructure and transport.
The expansion is part of the airline’s “We Connect the World to the Kingdom” initiative and supports Saudi Arabia’s National Civil Aviation Strategy, which aims to expand connectivity to 250 international destinations and reach 330 million passengers.
The initiative is also expected to strengthen the Kingdom’s National Tourism Strategy, which aims to attract more than 150 million tourists by the end of this decade.
In the statement, flynas said it will operate three weekly flights from Jeddah to Djibouti.
Flyadeal launches five new routes
In a separate statement, Saudi low-cost airline flyadeal said that it launched five routes from its operating bases of Dammam, Riyadh, and Jeddah, marking the start of a major expansion drive that includes entry to Pakistan next month.
According to the statement, the routes include 14 domestic flights a week from Dammam to Najran, Tabuk, and Yanbu.
The airline said that it launched flights from Riyadh and Jeddah to the Jordanian capital, Amman, with a total of 10 flights a week.
The statement added that preparations are also underway for the start of twice-weekly flights to Pakistan’s financial capital, Karachi, from Riyadh and Jeddah, effective Feb. 2.
“Expanding our domestic and international networks has been the focus of our planning team in recent months to provide leisure and business travelers with more choice, options and more importantly, greater air connectivity,” said Steven Greenway, CEO of flyadeal.
He added: “As more aircraft join flyadeal’s fleet during 2025, we will continue to inject additional capacity into our three bases with new routes and extra frequencies, part of a system wide expansion plan over the next 12 months.”
Launched in 2017, flyadeal currently serves almost 30 year-round and seasonal destinations in Saudi Arabia and selected Middle East, European, and North African cities. The airline operates a fleet of 36 Airbus A320 narrowbody aircraft.
Oil Updates — crude prices steady as winter fuel demands balance US fuel inventories activity
SINGAPORE: Oil prices were little changed on Thursday, with investors weighing firm winter fuel demand expectations against large builds of fuel inventories in the US, the world’s biggest oil user, and macroeconomic concerns.
Brent crude futures fell 6 cents to $76.1 a barrel by 10:27 a.m. Saudi time. US West Texas Intermediate crude futures fell 5 cents to $73.27.
Both benchmarks fell more than 1 percent on Wednesday as a stronger dollar, and the bigger-than-expected rise in US fuel stockpiles weighed on prices.
“The oil market is still grappling with opposite forces — seasonal demand to support the bulls and macro data that supports a stronger US dollar in the medium term ... that can put a ceiling to prevent the bulls from advancing further,” said OANDA senior market analyst Kelvin Wong.
JPMorgan analysts expect oil demand for January to expand by 1.4 million barrels per day year-on-year to 101.4 million bpd, primarily driven by “increased use of heating fuels in the Northern Hemisphere.”
“Global oil demand is expected to remain strong throughout January, fueled by colder-than-normal winter conditions that are boosting heating fuel consumption, as well as an earlier onset of travel activities in China for the Lunar New Year holidays,” the analysts said.
The market structure in the Brent futures is also indicating that traders are becoming more concerned about supply tightening at the same time the demand is increasing.
The premium of the first-month Brent contract over the six-month contract reached its widest since August on Wednesday. A widening of this backwardation, when futures for prompt delivery are higher than for later delivery, typically indicates that supply is declining or demand is increasing.
Nevertheless, official Energy Information Administration data showed rising gasoline and distillates stockpiles last week in the US.
The US dollar firmed further on Thursday, underpinned by rising Treasury yields ahead of US President-elect Donald Trump’s entrance into the White House on Jan. 20.
Looking ahead, WTI crude oil is expected to oscillate within a range of $67.55-$77.95 into February as the market awaits more clarity on Trump’s administration policies and fresh fiscal stimulus measures out of China, said OANDA’s Wong.
