Air India on Tuesday revealed plans to become one of the world's leading airlines, more than a year after it was taken over by Tata Group.
“We are very much embarked upon a transformation journey to put Air India quite firmly back in the top tier of international aviation,” said Campbell Wilson, the airline's managing director and chief executive.
“It is really an ambition to be back to world-class.”
However, he said it would be a challenging process after "years of neglect and underinvestment" in the airline.
“We are working at full steam to repair and restore but it will take some time,” said Mr Wilson, who added that he was “very confident” there was a path to profitability albeit with further hard work and investment.
Air India was privatised last year and has a fleet of about 100 aircraft, most of which are leased. This month, the airline placed an order for 470 Boeing and Airbus planes, marking the largest deal in commercial aviation history in a move aimed at transforming the airline under its new owners.
The New Delhi-based flag carrier will buy 220 planes from Boeing and 250 from Airbus. It said it was planning to fund the $70 billion order with internal cash, equity and sale and leasebacks.
Tata Group formally took over Air India in January last year after the government's long-awaited privatisation of the debt-laden and loss-making airline in a 180 billion rupee deal ($2.17 billion) for 100 per cent ownership.
Once a prestigious company, Air India had deteriorated over the years. The government had long been trying to privatise the airline amid criticism that it was bleeding taxpayers' money.
Since its takeover, Tata Group has been striving to turn fortunes around.
The latest aircraft order is part of an effort by Air India to expand internationally and bolster its position to compete with some of the top airlines in the world.
“India's geography is such that we can serve virtually all of the world,” said Mr Wilson, who added that the potential for Indian aviation was significant.
He said the airline was strongly focused on long-haul routes.
Air India recently said it planned to hire more than 4,200 cabin crew and 900 pilots as part of its expansion.
Mr Wilson said the biggest challenge was recruitment, and that the airline was investing in an academy to address this problem.
Tata Group also announced plans to merge Air India with Vistara, an airline owned by Tata in a joint venture with Singapore Airlines.
The proposed merger, which is awaiting regulatory clearance, is expected to be completed by next year.
Under the plans, Tata would hold nearly 75 per cent of the entity, while Singapore Airlines — which is expected to invest $252 million — would own the remaining stake.
Air India has also started a $400 million refurbishment programme for its aircraft, which includes replacing seats and entertainment systems.
The Indian market has enormous potential when it comes to air travel, analysts say, as only a single-digit percentage of the country's population travels by air, however, passenger numbers are expected to grow as middle-class incomes rise.
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Tank warfare
Lt Gen Erik Petersen, deputy chief of programs, US Army, has argued it took a “three decade holiday” on modernising tanks.
“There clearly remains a significant armoured heavy ground manoeuvre threat in this world and maintaining a world class armoured force is absolutely vital,” the general said in London last week.
“We are developing next generation capabilities to compete with and deter adversaries to prevent opportunism or miscalculation, and, if necessary, defeat any foe decisively.”
MATCH INFO
Liverpool 2 (Van Dijk 18', 24')
Brighton 1 (Dunk 79')
Red card: Alisson (Liverpool)
Gifts exchanged
- King Charles - replica of President Eisenhower Sword
- Queen Camilla - Tiffany & Co vintage 18-carat gold, diamond and ruby flower brooch
- Donald Trump - hand-bound leather book with Declaration of Independence
- Melania Trump - personalised Anya Hindmarch handbag
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.”
