Emirates SkyCargo has placed an order for an additional five Boeing 777 freighters as it expands its fleet in line with the growth in the cargo sector.
The additions will bring its freighter fleet to 17 and are expected to increase its main deck cargo capacity 30 per cent by 2026, the cargo unit of Dubai's Emirates airline said on Tuesday.
The new purchase takes Emirates’ order book to 245 Boeing widebody airplanes, 10 of which are 777 freighters. It comes as a boost for the US plane maker, which has been grappling with safety and legal challenges, along with delayed deliveries.
"This investment in additional Boeing 777 capacity enables us to cater to customer demand and marks a step forward on our long-term strategic growth plan,” Sheikh Ahmed bin Saeed, chairman and chief executive of Emirates airline and group, said.
“The next phase of our strategy will include a full assessment for our future freighter fleet reviewing all aircraft options to ensure we are best equipped to respond to the evolving demands of the market.”
Emirates SkyCargo serves 140 destinations across six continents, with a fleet including 777 freighters, 777 converted freighters and 747 freighters.
Its revenue for fiscal year 2023 reached Dh13.6 billion ($3.7 billion), contributing 11 per cent to Emirates' overall revenue, the company reported in May.
Total cargo demand, measured in cargo tonne-kilometres, rose by 14.7 per cent annually in May, with the increase at 15.5 per cent for international operations, the International Air Transport Association said in a report this month.
It marked the sixth consecutive month of double-digit year-on-year growth.
"The sector benefitted from trade growth, booming e-commerce and capacity constraints on maritime shipping," Iata's director general Willie Walsh said.
"The outlook remains largely positive with purchasing managers showing expectations for future growth. Some dampening, however, could come as the US imposes stricter conditions on e-commerce deliveries from China," he added.
The global air cargo industry is projected to reach $210.3 billion by 2027, a nearly 11 per cent growth from an estimated $189.75 billion in 2024, data from Statista shows.
Meanwhile, the order for Boeing comes as it is battling to overcome setbacks caused by safety and legal problems.
This month, the company pleaded guilty to a criminal fraud conspiracy charge, settling an investigation into two fatal 737 Max crashes in Indonesia and Ethiopia over five months in 2018 and 2019 that resulted in the deaths of 346 people.
It is also being investigated after an Alaska Airlines 737 Max flight had to make an emergency landing, when an outer part of the plane fell off shortly after take-off, in January.
“We deeply value Emirates’ trust in the Boeing widebody family and are committed to supporting their long-term strategic growth plan," said Stephanie Pope, president and chief executive of Boeing Commercial Aeroplanes.
Boeing said it currently provides more than 90 per cent of the global "dedicated freighter capacity", including new production and converted airplanes.
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British aristocrat Lord Carnarvon, who funded the expedition to find the Tutankhamun tomb, died in a Cairo hotel four months after the crypt was opened.
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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.”
