Royal Jordanian Airlines, the kingdom's national carrier, is in talks with plane manufacturers to add as many as 23 narrow-body aircraft to its fleet as the company looks to retire older planes and press on with a five-year turnaround strategy, its chief executive said.
"We are now in the process of a fleet rollover in the short-haul… we are in negotiations with all the four suppliers Boeing, Airbus, Embraer and Bombardier in order to get the best offer for us to renew the fleet," Stefan Pichler said in an interview with The National. "We will make a decision on which supplier to go with by the end of September this year."
The carrier plans to purchase four aircraft and lease the remaining two-thirds, which will be replacements for the airline's current fleet of 19 short-haul planes, Mr Picher said. The carrier also has seven long-haul craft.
The Amman-listed airline, which is 85 per cent government owned, embarked on a five-year turnaround strategy last year to shrink years of accumulated losses, repair the balance sheet and return to the capital market (start issuing equity to investors again), by 2021. The plan includes adding destinations and growing the fleet, adding capacity to existing routes, launching fare promotions and expanding the activities of loyalty programmes.
The turnaround is intended to enhance unit revenues by 7 per cent and lower unit costs by 5 per cent. The carrier is eyeing expansion in Europe, the US and the Levant – not the GCC and Asia, Mr Pichler said.
The former chief executive of the now-defunct European carrier Air Berlin, appointed last year to restore Royal Jordanian to growth, said positive results are already beginning to show.
The carrier narrowed its first quarter loss to 13.8 million Jordanian dinars from a loss of 26.3m dinars in the same period in 2017. Revenues increased 13.4 per cent in the first three months of the year to 143m dinars.
“It was a very good start to 2018 and we are pretty confident we will continue this strong performance for the rest of the year,” Mr Pichler said. “If we keep up this momentum we should see a significant increase," in net profit for 2018.
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The carrier also witnessed 7 per cent year-on-year growth in passenger numbers over the quarter, leading to a seat load factor of 73.4 per cent, up from 68.8 per cent in the year-earlier period. Royal Jordanian ended 2017 with a net profit of JD468,000 – “small” but significant after the airline reported a loss of JD26.3m in the first half of 2017, Mr Pichler said.
“We had a very strong second third and fourth quarter of 2017, which means we were able to enhance our load factor in the second half of the year by nearly 8 percentage points, which brought us more revenue, and we also made good progress on yields.”
The company achieved around JD11m of cost savings over the year from cutting capacity and making operational savings. “This altogether enabled us to report a small net profit for 2017,” Mr Pichler said.
Royal Jordanian cancelled an order for its seventh Boeing 787-8 in February “to trim excess capacity”, and plans to focus on growing a single aisle narrow-body fleet instead to support short-haul expansion. The airline has 25 planes in operation at present - 14 Airbus A320-family jets and five Embraer SA regional aircraft. “Rolling over the fleet” will take 5-6 years in total,” Mr Pichler said.
Meanwhile, the airline will start flying to Copenhagen in Denmark on June 2, it re-launched flights to Erbil and Sulaymaniyeh in Iraq in March, and it will launch services to Washington, D.C., from next spring, its seventh city in the US.
“Our plan is not driven by market share but by bottom line performance and sustainable profit growth,” Mr Pichler said.
The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
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.”
How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
The specs
Engine: 3-litre twin-turbo V6
Power: 400hp
Torque: 475Nm
Transmission: 9-speed automatic
Price: From Dh215,900
On sale: Now
Company%20Profile
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Other workplace saving schemes
- The UAE government announced a retirement savings plan for private and free zone sector employees in 2023.
- Dubai’s savings retirement scheme for foreign employees working in the emirate’s government and public sector came into effect in 2022.
- National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
- In April 2021, Hayah Insurance unveiled a workplace savings plan to help UAE employees save for their retirement.
- Lunate, an Abu Dhabi-based investment manager, has launched a fund that will allow UAE private companies to offer employees investment returns on end-of-service benefits.
Cryopreservation: A timeline
- Keyhole surgery under general anaesthetic
- Ovarian tissue surgically removed
- Tissue processed in a high-tech facility
- Tissue re-implanted at a time of the patient’s choosing
- Full hormone production regained within 4-6 months
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Where can I submit a sample?
Volunteers can now submit DNA samples at a number of centres across Abu Dhabi. The programme is open to all ages.
Collection centres in Abu Dhabi include:
- Abu Dhabi National Exhibition Centre (ADNEC)
- Biogenix Labs in Masdar City
- Al Towayya in Al Ain
- NMC Royal Hospital in Khalifa City
- Bareen International Hospital
- NMC Specialty Hospital, Al Ain
- NMC Royal Medical Centre - Abu Dhabi
- NMC Royal Women’s Hospital.
Emergency
Director: Kangana Ranaut
Stars: Kangana Ranaut, Anupam Kher, Shreyas Talpade, Milind Soman, Mahima Chaudhry
Rating: 2/5
SPEC%20SHEET%3A%20APPLE%20IPHONE%2014
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Game Changer
Director: Shankar
Stars: Ram Charan, Kiara Advani, Anjali, S J Suryah, Jayaram
Rating: 2/5
David Haye record
Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4