Frankly Speaking: Emirates Airline chief Tim Clark expects return to ‘full capacity’ by summer of 2022

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Updated 04 July 2021
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Frankly Speaking: Emirates Airline chief Tim Clark expects return to ‘full capacity’ by summer of 2022

  • Once the pandemic is over, there will be a tsunami of demand from people wanting to travel, Clark told Arab News
  • Appearing on Frankly Speaking, he also offered advice on Saudi plans for launching a second international airline

 

DUBAI: Emirates will be back to full capacity by next summer as the pandemic-stricken aviation industry enjoys an “exceptional surge” in passenger numbers, Sir Tim Clark, the airline’s president, told Arab News.

“Taking the short-term view, I think we’ve got another six months of difficulty. If you ask me about the summer of 2022, I’m fairly confident that next year we’ll see a completely different picture, and that certainly airlines like Emirates will have restored themselves to full capacity, albeit possibly six months later than we originally thought,” he said.

“Once the pandemic is over, there will be a tsunami of demand from people wanting to travel — whether it be friends and relatives, second homes, business, leisure — the multiple segments all of which have been suppressed over the last 15 or 16 months,” Clark added.

He gave his confident forecast during an interview on Frankly Speaking, the series of video interviews with influential policy-makers and business people.

In the course of a wide-ranging discussion about the Dubai-based carrier and the global aviation industry, Clark spoke of the improving financial situation at Emirates, which lost $5.5 billion last year, as well as the possibility of a merger with rival Abu Dhabi airline Etihad.




Emirates has suffered financially during the pandemic lockdown, which grounded its fleet entirely for two months before a selective reopening from last summer. (AFP/File Photo)

He also discussed the future of the A380 aircraft, which has not taken to the air since the pandemic struck last year, and offered some expert advice to Saudi Arabia as the Kingdom plans to launch a second international airline.

He was adamant that the Emirates business model — providing global connectivity around the Dubai hub for an ever-increasing air travel market — would be effective “in perpetuity.”

“Are you suggesting that people won’t travel, that they won’t want to do all the things that they did prior to the pandemic? Are you suggesting that, as many do, that you and I talking on these video conferencing platforms is going to kill the need to travel on business? Are people not going to travel for holidays, for leisure, for visiting friends and relatives for the multiplicity of reasons that people travel across the planet,” he asked.

“Dubai will reassert itself as a global super hub. It’ll strengthen that. The airport will strengthen, and we’ll have more cities on the network within the next three to five years. So just watch this space.”

Dubai was right to reopen its economy and its airline last year even as the pandemic raged around the world and new variants of the virus emerged, Clark insisted.

“They were first movers, remember, in establishing lockdown in April and May last year. They were early movers in the acceptance that vaccines are going to sort the problem out eventually. So, did they make the right decision? Yes, they did. The airline adapted fairly quickly as it has done to the downturn as a result of new variants coming out, but again the town, the city (Dubai), will adapt. It’s known for its adaptability,” he said.




During a Frankly Speaking interview, Clark spoke of the improving financial situation at Emirates, which lost $5.5 billion last year, as well as the possibility of a merger with rival Abu Dhabi airline Etihad. (AN Photo)

The US air travel market would be the first to show a significant increase, he said, followed in “fits and starts” by Europe and the rest of the world, as vaccines are rolled out globally and medical treatment for the infection improves. But Clark was uncertain as to when the important UK air routes with the UAE would reopen without quarantine and other restrictions that have kept that market depressed.

“My own view has been expressed fairly forcefully to the UK government and I know the UAE foreign ministry has been fairly assertive on this. There is no reason why the UAE should be on the red list at all in my view, particularly as the country is so well on top of the problem,” he said.

The UK has said it will fully reopen its economy later this month, on July 19, but was unsure whether this would mean full reopening of flights with the UAE.

“They’ve got to accept of course that if their citizens have been vaccinated and go anywhere, the reciprocal has got to be in place. I think with all that, the evidence will suggest that probably by August, September they will be more relaxed about entry and travel,” he said.

Clark also hopes that by the autumn Saudi Arabia would reopen the lucrative routes between Dubai and business centers in the Kingdom, which have been closed because of pandemic precautions.

He offered advice to the Kingdom’s policymakers as they plan the launch of a second international airline alongside Saudia.




An Emirates Airbus A380-842 grounded at Dubai international Airport after Emirates suspended all passenger operations amid the COVID-19 coronavirus pandemic, on March 24, 2020. (AFP/File Photo)

“With anything like this, you’ve got to have the right people who know what they’re doing. They obviously need a large amount of cash to get things going, which I’m sure they have in Saudi Arabia. If they believe that an additional airline, perhaps operating a slightly different business model, will be necessary, I’m sure they’ll just get on with it,” he said.

Emirates has suffered financially during the pandemic lockdown, which grounded its fleet entirely for two months before a selective reopening from last summer. But Clark foresees an end to losses “probably within the next year or two”, although it is still unclear whether the airline will need more support from the Dubai government on top of the $3.1 billion it has already received.

“It’s anybody’s guess. Much will depend on what happens over the next six and nine months. The cash burn has slowed, and we are not in a cash critical situation at the moment. I am 100 percent convinced that the Dubai government will do what it takes to ensure that Emirates is financially secure,” he said.

He expected the Expo 2020 world exhibition that begins in Dubai in October to provide a “fillip” to the airline’s business.

The financial damage from the pandemic has again raised the issue of a merger between Emirates and Etihad, but Clark said this matter was “well above my pay grade.” He believes there will be more operational and backroom collaboration between the two airlines, but that did not imply a full-blown merger, which would require a deal between the governments of Dubai and Abu Dhabi.




Clark is adamant that the Emirates business model — providing global connectivity around the Dubai hub for an ever-increasing air travel market — would be effective “in perpetuity.” (AFP/File Photo)

The Airbus A380 wide-bodied plane was critical to Emirates’ expansion and profitability before the pandemic struck, but more than 100 of the planes have been parked since last year. There are plans to return some to service this summer, and Clark was confident about the aircraft.

Emirates has just taken delivery of two new A380s, and three more are being delivered in November, although the European manufacturer has said it will not build any more of the aircraft. “So, in the fullness of time of course it will have to go, but, in the meantime, we will work this aircraft, we will spend money on it, to refurbish it, to improve the product, make it even more attractive,” he said.

Clark, who has been with Emirates for three and a half decades, was due to retire last year, but agreed to stay on to deal with the pandemic. He declined to say whether a new departure date had been set.

“I’ve got a great bunch of guys I work with, and they’ve been working with me for the last 20 years. So, goodness me, the shareholder has got plenty of opportunity to select or do what they want to do with regard to the business. It’s not really relevant in the scheme of things whether I’m here or not,” he said.

He added that he hopes to stay on with the airline in an advisory capacity after he steps down from the presidency, and would like to focus on charitable activities like the Emirates Airline Foundation. But he did not rule out another big job in global aviation.

“I’m not saying I wouldn’t do it if I was asked, but I would prefer to get involved in things other than the commercial world,” Clark said.

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Twitter: @FrankKaneDubai


SABIC, Almarai, SEC able to absorb fuel price hike: S&P Global

Updated 09 January 2025
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SABIC, Almarai, SEC able to absorb fuel price hike: S&P Global

RIYADH: Major Saudi companies, including chemical company SABIC, dairy firm Almarai, and Saudi Electric Co., are well-positioned to handle the impact of higher fuel and feedstock prices introduced on Jan. 1, according to a new report.

Released by capital market economy firm S&P Global, the analysis reveals that those corporates will be able to absorb the marginal increase in production costs by further improving operational efficiencies as well as potentially via pass-through mechanisms.

This came after Saudi Aramco increased diesel prices in the Kingdom to SR1.66 ($0.44) per liter, effective Jan. 1, marking a 44.3 percent rise compared to the start of 2024. The company has kept gasoline prices unchanged, with Gasoline 91 priced at SR2.18 per liter and Gasoline 93 at SR2.33 per liter.

Despite the hike, diesel prices in Saudi Arabia remain lower than those in many neighboring Arab countries. In the UAE and Qatar, a liter of diesel is priced at $0.73 and $0.56, respectively, while in Bahrain and Kuwait, it costs $0.42 and $0.39 per liter.

“For SABIC and Almarai, the increase in feedstock prices will not affect profitability significantly. In the case of utility company, SEC, additional support will likely come from the government if needed,” the report said.

The capital market economy firm projects that SABIC will continue to outperform global peers on profitability.

“We don’t expect the rise in feedstock and fuel prices to materially affect profitability, since the company estimates it will increase its cost of sales by only 0.2 percent,” the report said.

It further highlighted that SABIC is considered a government-related entity with a high possibility of receiving support when needed.

The report also underlines that Almarai anticipates an additional SR200 million in costs for 2025, driven by higher fuel prices and the indirect effects of increased expenses across other areas of its supply chain.

“We believe Almarai will continue focusing on business efficiency, cost optimization, and other initiatives to mitigate these impacts,” the release stressed.

With regards to SEC, S&P said that an unrestricted and uncapped balancing account provides a mechanism for government support, including related to the higher fuel costs.

“We believe any increased fuel cost will be covered by this balancing account,” the report said.

The study further highlights that the marginal increase “could significantly affect wider Saudi corporations’ profit margins and competitiveness.”

The S&P data also suggests that additional costs will be reflected in companies’ financials from the first quarter of 2025.

“Saudi Arabia is continuing its significant and rapid transformation under the country’s Vision 2030 program. We expect an acceleration of investments to diversify the Saudi economy away from its reliance on the upstream hydrocarbon sector,” the report said.

“The sheer scale of projects — estimated at more than $1 trillion in total — suggests large funding requirements. Higher feedstock and fuel prices would help reduce subsidy costs for the government, with those savings potentially redeployed to Vision 2030 projects,” it added.


Lenovo to produce ‘Saudi Made’ PCs by 2026 following $2bn Alat deal closure

Updated 09 January 2025
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Lenovo to produce ‘Saudi Made’ PCs by 2026 following $2bn Alat deal closure

RIYADH: Chinese tech giant Lenovo is set to manufacture millions of computer devices in Saudi Arabia by 2026, following the completion of a $2 billion investment deal with Alat, a subsidiary of the Public Investment Fund. 

First announced in May, the partnership has now received shareholder and regulatory approvals, paving the way for Lenovo to establish a regional headquarters and a manufacturing facility in the Kingdom. 

The deal marks a significant step in aligning Lenovo’s growth ambitions with Saudi Arabia’s Vision 2030 goals of economic diversification, innovation, and job creation, the company said in a press release. 

The factory will manufacture millions of PCs and servers every year using local research and development teams for fully end-to-end “Saudi Made” products and is expected to begin production by 2026, it added. 

“Through this powerful strategic collaboration and investment, Lenovo will have significant resources and financial flexibility to further accelerate our transformation and grow our business by capitalizing on the incredible growth momentum in KSA and the wider MEA region,” Yang said. 

He added: “We are excited to have Alat as our long-term strategic partner and are confident that our world-class supply chain, technology, and manufacturing capabilities will benefit KSA as it drives its Vision 2030 goals of economic diversification, industrial development, innovation, and job creation.” 

Amit Midha, CEO of Alat, underscored the significance of the partnership for both Lenovo and the Kingdom. 

“We are incredibly proud to become a strategic investor in Lenovo and partner with them on their continued journey as a leading global technology company,” said Midha. 

“With the establishment of a regional headquarters in Riyadh and a world-class manufacturing hub, powered by clean energy, in the Kingdom of Saudi Arabia, we expect the Lenovo team to further their potential across the MEA region,” he added. 

The partnership is expected to generate thousands of jobs, strengthen the region’s technological infrastructure, and attract further investment into the Middle East and Africa, according to the press release. 

In May, Lenovo raised $1.15 billion through the issuance of warrants to support its future growth plans. The initiative, which was fully subscribed by investors, signals confidence in Lenovo’s strategic approach and its plans for global expansion. 

The investment deal was advised by Citi and Cleary Gottlieb Steen & Hamilton for Lenovo, while Morgan Stanley and Latham & Watkins represented Alat. 


Lebanon’s bonds climb as parliament elects first president since 2022

Updated 09 January 2025
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Lebanon’s bonds climb as parliament elects first president since 2022

LONDON: Lebanon’s government bonds extended a three-month long rally on Thursday as its parliament voted in a new head of state for the crisis-ravaged country for the first time since 2022.

Lebanese lawmakers elected army chief Joseph Aoun as president. It came after the failure of 12 previous attempts to pick a president and the move boosts hopes that Lebanon might finally be able to start addressing its dire economic woes.

Lebanon’s battered bonds have almost trebled in value since September when the regional conflict with Israel weakened Lebanese armed group Hezbollah, long viewed as an obstacle to overcoming the country’s political paralysis.

Most of Lebanon’s international bonds, which have been in default since 2020, rallied after Aoun’s victory was announced to stand between 0.8 and 0.9 cents higher on the day and at nearly 16 cents on the dollar.

They have also risen almost every day since late December, although they remain some of the lowest priced government bonds in the world, reflecting the scale of Lebanon’s difficulties.

With its economy still reeling from a devastating financial collapse in 2019, Lebanon is in dire need of international support to rebuild from the war, which the World Bank estimates to have cost the country $8.5 billion.

 


Closing Bell: Saudi main index closes in green at 12,097

Updated 09 January 2025
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Closing Bell: Saudi main index closes in green at 12,097

RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Thursday, gaining 9.01 points, or 0.07 percent, to close at 12,097.75. 

The total trading turnover of the benchmark index was SR7.48 billion ($1.99 billion), as 96 stocks advanced, while 133 retreated.    

The MSCI Tadawul Index decreased by 3.28 points, or 0.22 percent, to close at 1,510.14. 

The Kingdom’s parallel market, Nomu, surged, gaining 251.24 points, or 0.82 percent, to close at 31,027.39. This comes as 56 of the listed stocks advanced, while 32 declined. 

The best-performing stock was Nice One Beauty Digital Marketing Co. for the second day in a row, with its share price increasing by 7.69 percent to SR49. 

Other top performers included Fawaz Abdulaziz Alhokair Co., which saw its share price rise by 6.5 percent to SR14.74, and Abdullah Saad Mohammed Abo Moati for Bookstores Co., which saw a 4.42 percent increase to SR35.45. 

Arabian Pipes Co. and Dr. Sulaiman Al Habib Medical Services Group also saw positive change with their share prices moving up by 4.10 percent and 3.89 percent to SR12.70 and SR298.80, respectively. 

The worst performer of the day was Salama Cooperative Insurance Co., whose share price fell by 5.88 percent to SR19.52. 

Almoosa Health Co. and Al Hassan Ghazi Ibrahim Shaker Co. also saw declines, with their shares dropping by 5.13 percent and 3.91 percent to SR133.20 and SR28.25, respectively.   

On the announcements front, Riyad Bank declared its intention to fully redeem its $1.5 billion fixed-rate reset tier 2 sukuk, issued in February 2020, on Feb. 25, 2025.  

According to a Tadawul statement, the sukuk originally maturing in 2030, will be redeemed at face value in accordance with the terms and conditions. The redemption, approved by the regulators, will include any accrued but unpaid periodic distributions.  

On the redemption date, Riyad Sukuk Limited will deposit the full amount into the accounts of sukuk holders, marking the completion of the issuance. This redemption will conclude the sukuk’s life, with no remaining value post-redemption. 

Riyad Bank ended today’s trading session edging up by 0.91 percent to SR27.85.


Rotana eyes growth in smaller Saudi cities amid hospitality expansion

Updated 09 January 2025
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Rotana eyes growth in smaller Saudi cities amid hospitality expansion

RIYADH: Rotana Hotels is turning its attention to smaller cities in Saudi Arabia as part of its ambitious growth strategy to strengthen its presence in the Kingdom. 

Speaking on the sidelines of the third Saudi Tourism Forum, the firm’s Chief Operating Officer Eddy Tannous told Arab News the company is engaging with tourism authorities, development funds, and private investors to explore opportunities in emerging destinations such as Al-Baha and Asir.

Rotana has previously announced its plans to develop nine new properties in Saudi Arabia, five of which are scheduled to open in 2025. This follows the launch of three hotels in 2024, including Nova M, the first Edge by Rotana property, as well as Dar Rayhaan by Rotana in Alkhobar and Al Manakha Rotana in Madinah.

Tannous said: “We have development on properties that will probably open in the next, I want to say, two to five years. Probably six to eight properties in those tertiary cities where it’s becoming a destination that people want to go to as well.”

With Saudi Arabia ranking third globally for international tourist arrival growth in 2024, with a 25 percent increase compared to the previous year, the Kingdom’s hospitality sector is seeing rapid growth.

The company’s goal is to triple its current key count in the Kingdom to 6,000 within the next three years, bolstered by strong demand for hospitality services.

Rotana’s upcoming developments, including Yasmina Rayhaan by Rotana in Riyadh, aim to meet this increasing demand.

“We are a regional brand. We are a brand that grew up in this region, so Saudi Arabia has always been a focus for us. But I think with the announcement of Vision 2030, it became more of a catalyst for us to continue focusing on Saudi Arabia,” Tannous said.

He added: “Saudi Arabia is the region or is the country in this Middle East region that’s growing the fastest and that’s growing with the biggest magnitude from a hospitality standpoint. Our main focus in Saudi Arabia is to focus both on the government sector projects and individual investors.”

Rotana’s expansion strategy is also geared toward major international events, including Saudi Arabia’s hosting of the FIFA World Cup in 2034. This event is expected to attract millions of visitors, creating significant opportunities for the hospitality sector.

Commenting on the company’s plans, Rotana CEO Philip Barnes said in a press release: “We see tremendous potential for expansion in Saudi Arabia. Our ambitious pipeline for KSA underscores our commitment to the hospitality and tourism sectors, both in the Kingdom and regionally, as demand for business and leisure travel soars to new heights in anticipation of major events such as the FIFA World Cup 2034.”

Beyond Saudi Arabia, Rotana is expanding across the Middle East, Africa, Eastern Europe, and Turkiye, where it currently operates 81 properties. The company has a pipeline of 36 new properties in 22 cities, including its projects in Saudi Arabia.

Rotana is also strengthening its presence in key markets such as the UAE, Turkiye, and Africa, where demand for leisure and business travel is on the rise.

“As a company today, we run 86 properties in the world. Some of our source markets to Dubai and Abu Dhabi, which are two of our biggest markets, include the UK, Germany, and Russia,” Tannous said.

Rotana is also preparing for significant updates to its loyalty program, which are expected to be announced later this year — although details remain under wraps.

“It’s not something I can talk about today, but we will hopefully in 2025,” Tannous said. “The most exciting thing for me right now is what we’re doing on our loyalty program because that will open the door for bank partnerships, credit card partnerships, airline partnerships.”

Rotana’s expansion in Saudi Arabia and beyond reflects its commitment to meeting the growing demand for hospitality services while positioning itself as a leader in both regional and international markets.