Pilots look out at an American Airlines aircraft at Dallas-Ft Worth International Airport in Texas. Federal law prohibits airline unions from striking without the approval of a US mediation board. Reuters
Pilots look out at an American Airlines aircraft at Dallas-Ft Worth International Airport in Texas. Federal law prohibits airline unions from striking without the approval of a US mediation board. Reuters
Pilots look out at an American Airlines aircraft at Dallas-Ft Worth International Airport in Texas. Federal law prohibits airline unions from striking without the approval of a US mediation board. Reuters
Pilots look out at an American Airlines aircraft at Dallas-Ft Worth International Airport in Texas. Federal law prohibits airline unions from striking without the approval of a US mediation board. Reu

Pilots at American and Southwest increase strike threats


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Pilots at American Airlines have voted to authorise a strike and Southwest Airlines pilots are preparing to join them, as unions put more pressure on the airlines to approve new contracts with hefty pay rises.

The actions by pilots are highly unlikely to lead to walkouts anytime soon.

Federal law prohibits airline unions from striking without the approval of a US mediation board — a rare step that has not occurred with negotiations at either American or Southwest. Congress and the president can also act to prevent a strike if one appears imminent.

Airline unions like to take strike votes, however, which they believe increase their leverage at the bargaining table. American, Southwest and United Airlines are under pressure to match or beat terms that rival Delta Air Lines accepted with its pilots, who earlier this year won 34 per cent pay rises over a four-year contract that will cost Delta about $7 billion.

Some smaller airlines have experienced pilot shortages, and the largest ones have all strained to hire and train enough new pilots to meet surging travel demand. That gives the unions more bargaining power than usual.

At American Airlines, the Allied Pilots Association said that more than 96 per cent of its 15,000 members voted, and among those who did, 99 per cent favoured authorising the union to call for a strike.

A spokeswoman for the Fort Worth, Texas-based airline said American is confident that it can reach an agreement with the union quickly.

“We understand that a strike-authorisation vote is one of the important ways pilots express their desire to get a deal done, and we respect the message of voting results,” said Sarah Jantz.

The American pilots’ union said it is also seeking scheduling changes that union officials say will improve efficiency and prevent the kind of widespread delays and cancellations seen last summer.

“The summer travel season is almost here, and we’re all wondering whether this will be another summer of uncertainty for American Airlines,” union president Ed Sicher said.

Members of the Southwest Airlines Pilots Association began voting on Monday on a strike-authorisation measure that is expected to pass easily.

Adam Carlisle, Southwest's president of labour relations, said the vote will not affect the Dallas, Texas-based airline's operations. He said negotiations are scheduled to resume this week with help from federal mediators, and the airline hopes to reach an agreement with pilots that “places them competitively in the industry”.

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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.”

WHAT IS A BLACK HOLE?

1. Black holes are objects whose gravity is so strong not even light can escape their pull

2. They can be created when massive stars collapse under their own weight

3. Large black holes can also be formed when smaller ones collide and merge

4. The biggest black holes lurk at the centre of many galaxies, including our own

5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed

Updated: May 02, 2023, 8:13 PM