Emirates has ordered Boeing 777-200LR freighter aircraft worth more than $1.7bn. Photo: Emirates
Emirates has ordered Boeing 777-200LR freighter aircraft worth more than $1.7bn. Photo: Emirates
Emirates has ordered Boeing 777-200LR freighter aircraft worth more than $1.7bn. Photo: Emirates
Emirates has ordered Boeing 777-200LR freighter aircraft worth more than $1.7bn. Photo: Emirates

Business

Aviation

Emirates buys five Boeing 777 freighters in $1.7bn order

Two of the 777-200LR aircraft will be delivered in 2024 and the remaining three in 2025

Deena Kamel
Deena Kamel

November 08, 2022

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Emirates, the world's biggest long-haul airline, has placed a firm order for five Boeing 777 freighters valued at more than $1.7 billion at list prices, expanding its fleet as it bets on continued growth of air cargo demand.

The first two 777-200LR freighter aircraft will be delivered in 2024 and the remaining three in 2025, Emirates said on Tuesday.

“This order reflects Emirates’ confidence in air freight demand and overall aviation sector growth,” Sheikh Ahmed bin Saeed, chairman and chief executive of Emirates airline and group, said.

“Emirates is investing in new freighters so that we can continue to serve customer demand with the latest fuel-efficient aircraft.”

Air cargo was a rare bright spot for airlines during the travel-starved years of the Covid-19 pandemic, prompting many to convert older passenger jets to freighters and to invest in new cargo planes.

Strong e-commerce demand and the slower return of passenger flights with cargo belly capacity drove airlines to snap up freighters.

This agreement takes Emirates' total order book to 200 wide-body aircraft. The airline's freight arm Emirates SkyCargo currently operates an all-Boeing fleet of 11 B777 freighters.

This is addition to the belly-hold cargo capacity on its fleet of wide-body Boeing 777 and Airbus A380 passenger aircraft.

“The expansion of Emirates' fleet with these additional fuel-efficient 777 freighters will enable the airline to support its growing cargo market demand, transporting goods rapidly and efficiently from origin to destination in the Middle East and around the world,” said Stan Deal, president and chief executive of Boeing Commercial Airplanes.

The deal comes after Emirates ordered two new Boeing 777 freighters at the Dubai Airshow in November last year. These have already joined the Emirates fleet, the airline said on Tuesday.

Global air cargo demand softened in September, with volumes below the “exceptional performance” of 2021 as major economies contract and new export orders drop, the International Air Transport Association (Iata) said in its monthly report on Monday.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Updated: November 08, 2022, 9:56 AM
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