Relatives of the Spanair air crash victims grieve outside a Madrid hotel on Aug 21 2008. Three days of mourning have been declared for the 153 passengers who lost their lives in the Spanair passenger plane crash of flight JK 5022 at Madrid's Barajas airport.
Relatives of the Spanair air crash victims grieve outside a Madrid hotel on Aug 21 2008. Three days of mourning have been declared for the 153 passengers who lost their lives in the Spanair passenger Show more

More than one failure behind plane crash



MADRID // The airliner that crashed in Madrid must have suffered more than one kind of failure, Spain's civil aviation chief said, as the investigation into the cause of the disaster that killed 153 people heated up today. Only 19 people survived Wednesday's crash of the Spanair twin-engined plane bound for the Canary Islands. "There has been more than one breakdown," Manuel Batista, the head of Spain's Civil Aviation, told the El Pais newspaper. Contrary to some accounts by witnesses, the newspaper said video taken by the Spanish airport authority AENA does not show any engine explosion while the Spanair MD-82 was taking off.

Mr Batista said engine failure alone would not be enough to bring the plane down because modern aircraft are designed to fly on just one engine in an emergency, and pilots practice doing this. "I am not so sure that the engine failed," Mr Batista said. The plane abandoned one takeoff attempt because of a mechanical problem with what the airline called an air intake valve near the cockpit. But experts have said this, too, was unlikely to have caused the crash, Spain's worst air disaster in 25 years.

The investigation into what brought down the plane is likely to take months, though information could come from the two recovered black boxes before then. The government says it has a wealth of information to work with, including video footage of the plane's takeoff from airport cameras. Today relatives of those killed in the crash continued with the ordeal of identifying bodies. Many bodies were burnt beyond recognition and forensic teams are taking DNA samples from relatives. Around 50 sets of remains have been identified.

An official funeral presided over by the Madrid Archbishop Antonio Maria Rouco has been scheduled for Sept 1, the city government said. More stories of heroism and heartbreaking poignancy have emerged. Francisco Martinez, who was one of the first firemen to arrive at the crash site, spoke of Amalia Filloy, a mother severely injured in the crash, who insisted that rescuers pull her 11-year-old daughter Maria out first. The woman died, along with an older daughter, but Maria survived, along with her father. Mr Martinez said he also rescued one of two little boys who survived the crash. "He asked if what was happening was for real," Mr Martinez said. "He thought it was a movie, and asked where his father was and when the movie would end."

* AP

Europe’s rearming plan
  • Suspend strict budget rules to allow member countries to step up defence spending
  • Create new "instrument" providing €150 billion of loans to member countries for defence investment
  • Use the existing EU budget to direct more funds towards defence-related investment
  • Engage the bloc's European Investment Bank to drop limits on lending to defence firms
  • Create a savings and investments union to help companies access capital
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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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