The US Federal Aviation Administration has indefinitely extended the grounded status of Boeing 737-9 Max aircraft given the more stringent requirements it put forward after an Alaska Airlines flight suffered a window blowout shortly after take-off last week.
The regulator has required the US plane maker, one of the world's biggest, to provide additional data before the agency approves an “extensive and rigorous inspection and maintenance process for returning 737-9 Max aircraft to service”, it said on Friday.
In addition, the FAA has required 40 aircraft to undergo inspections of their door plugs – a panel fitted in place of an unused emergency exit that may have caused the Alaska accident.
The FAA said that while it is “encouraged” by the “exhaustive nature” of Boeing’s instructions for inspections and maintenance, the agency will not approve the inspection and maintenance process until it reviews data from the initial round of 40 inspections, “in the interest of maintaining the highest standard of safety the agency”.
“We are working to make sure nothing like this happens again. Our only concern is the safety of American travellers and the Boeing 737-9 Max will not return to the skies until we are entirely satisfied it is safe,” FAA administrator Mike Whitaker said.
The Alaska blowout incident happened on January 5, which left a gaping hole in the side of the aircraft's fuselage.
There were 177 people on board the Alaska Airlines plane, which made an emergency landing when a window panel blew out after take-off. The plane had departed from Portland International Airport in Oregon. The cabin crew reported a pressurisation issue and the flight returned to the ground after 20 minutes.
The incident also happened a week after Boeing urged airlines to inspect 737 Max aircraft for a possible loose bolt in the rudder control system, according to the FAA.
Fellow US carrier United Airlines on Monday said it found loose bolts in Boeing 737 Max jets as it carried out inspections after the Alaska episode.
“Since we began preliminary inspections on [January 6], we have found instances that appear to relate to installation issues in the door plug – for example, bolts that needed additional tightening,” United, one of the world's biggest airlines, said.
Both Alaska and United have suspended Boeing 737-9 Max flights until Tuesday.
On Thursday, the FAA announced an investigation to determine if Boeing failed to ensure completed products conformed to its approved design and were in a condition deemed safe for operation in compliance with the watchdog's regulations.
On Friday, the agency said it will increase its supervision of Boeing's production line as it reassesses safety risks following the Alaska incident.
Boeing stocks also took a hit when markets opened this week, closing down more than 8 per cent at the end of the trading on Monday.
On Tuesday, Boeing chief executive Dave Calhoun said that the plane maker should accept the fault and make amends after the blowout led to concerns about its quality standards.
“Upon a full review of the data the FAA will make a determination whether the instructions satisfy compliance with the highest standard of safety,” the FAA said.
“If the FAA approves Boeing’s inspection and maintenance instructions, operators will be required to perform that regimen on every aircraft before it is returned to service.”
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Rosewood and Transparent — heart issues
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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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