Cargo carrier buys two 747s



Midex Airlines, the all-cargo carrier based in Al Ain, has bought two used Boeing 747-200s to meet a surge in demand in the charter market. The carrier, which calls Al Ain its "mother area" but has a base at Dubai International Airport and is opening a base in Sharjah, has increased its fleet to nine after buying the freighters from Air France.

The planes are to be delivered within weeks. The deliveries will help Midex serve emerging destinations such as Afghanistan and Iraq. It is taking delivery of the aircraft even as it has curtailed services to Paris and other cities due to a glut of cargo capacity from passengers airlines. Where once Midex flew daily from Al Ain to Paris, it now operates only once a week on that route. It has postponed plans to open cargo routes to Mumbai, Cochin, Dhaka and Istanbul.

"The market has changed with the recession, but we've developed our charter divisions and it has been excellent," said Jassim al Bastaki, the airline's director general. Air freight recovered strongly in November, with Middle East volumes rising the fastest of any region worldwide at 21.5 per cent, data from the International Air Transport Association showed. However, rapid expansion among Middle East passenger airlines has increased cargo competition for Midex on some of its traditional routes, leading it to look at untapped markets, Mr al Bastaki said.

The 747s bring the total number of Boeing jumbo jets in the Midex fleet to three. The remaining six planes are Airbus A300 freighters. The 747s were bought because of the popularity of the plane's nose-loaders among shippers, Mr al Bastaki said. The airline is carrying about 150 tonnes of cargo a day through its charters, down from an initial forecast in 2008 of 200 tonnes a day. The focus on Iraq and Afghanistan suggests that reconstruction efforts and budding consumer demand in those once-closed markets are providing a boon for cargo and passenger airlines willing to face the risks. Midex joins Gulf Air of Bahrain, Elite Aviation of Abu Dhabi and RAK Airways in launching or planning to launch services.

Midex has weathered the economic downturn by extending its services to Libya, Germany, Korea and China, Mr al Bastaki said. The performance of Midex Airlines will be keenly followed by Abu Dhabi's aviation planners, who have high hopes for stimulating business out of Al Ain airport. With its central location between Abu Dhabi, Dubai and ports in Oman, Al Ain is seen as a key undervalued resource by Abu Dhabi Airports Company and Mubadala Development, which are behind plans for a US$1 billion (Dh3.67bn) aviation cluster at the airport, encompassing cargo operations, logistics and high-end aircraft parts manufacturing.

The site was chosen for Mubadala's Strata Manufacturing business so it could fly finished products to Airbus in Toulouse 24 hours a day without delay, officials have said. Midex has found the airfield ideal because it is central and uncongested and is the only UAE airport to be free of fog, Mr al Bastaki said. @Email:igale@thenational.ae

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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.”