A departure board is filled with cancelled and delayed flight notifications at the Zaventem airport near Brussels.
A departure board is filled with cancelled and delayed flight notifications at the Zaventem airport near Brussels.

Airlines heading to clear skies in the new year



Exceptionally cold weather and heavy snowfall have caused travel chaos for airlines in Europe, but analysts say the disruptions will not mar a positive outlook for the airline sector if corporate travel increases next year as expected.

The impact of the weather in recent days is considered a short-term, "one-off event"that should not affect investment ratings, said Tony Shepard, an analyst at Charles Stanley. Analysts have compared the disruption to that caused by a volcanic ash cloud this year. That period of flight disruptions hit market sentiment in the short term but had no lasting impact.

Recently, thousands of travellers have been stranded at European airports as snow-clogged runways and shortages of de-icing equipment and fluid led to cancelled or delayed flights.

Paris's Charles de Gaulle airport, Europe's second-busiest, cut the number of flights by 35 per cent on Christmas Eve because of a shortage of the antifreeze used to remove ice from aircraft wings and fuselages, and has forecast more bad weather. About 2,000 people were forced to spend Thursday night at the two main airports in Paris as snowfall in the north and east of France continued to disrupt transport services.

"I can't remember the weather being this bad in December," said Jan Van der Cruysse, a spokesman for Brussels airport. The airport prepared hundreds of beds for stranded passengers over Christmas after it reopened to inbound flights following a day of delays and cancellations.

Friday's disruptions came after chaos earlier in the week, when tens of thousands of travellers were stranded across Europe as delays and cancellations of flights and high-speed trains were compounded by weather-related restrictions on road travel.

When the weather clears, however, airlines can look forward to a year of increased demand.

The more profitable business segment of air travel is rising again, as economies emerge from recession.

"It's really about the premium business traffic. It's linked to the strength of the corporate sector, and the pick-up in world trade growth, which is continuing," said Richard Batty, a strategist at Standard Life Investments in Edinburgh.

Revenue at Air France-KLM is forecast to rise to €27.2 billion (Dh131.05bn) for the year to March 2012, up 11 per cent on the year to March this year, according to Credit Suisse estimates, largely because of a rise in premium traffic. Analysts say airlines' costs will not rise as much as turnover because revenue per unit of traffic tends to be higher for business travel, even with budget airlines.

Overall passenger traffic for most airlines in recent months is up on a year ago, reversing a trend earlier in the year, according to the airlines' own figures. On average, more seats are being filled, boosting operating margins, analysts say.

The International Air Transport Association said this month that the number of passengers travelling in premium seats - first and business class - was 10.9 per cent higher in October than in the same month a year earlier.

It also said the world's airlines would return to profit this year and next at higher levels than previously expected because of an upturn in the market and better use of their capacity.

"The airlines did a good job on restructuring [through the downturn]", said Stephen Furlong, an analyst at Davy Research, who has an "outperform" rating on the sector.

Even a projected rise in oil prices next year, currently hovering at about US$90 per barrel, may not have a major impact.

Analysts say that if oil price rises are linked to economic growth, rises in fares and traffic will more than compensate. And any surprise moves in the oil price are being managed by airlines hedging their requirements. "If the oil price is higher, that will be reflected in the fares as well," said Gert Zonneveld, an analyst at Panmure Gordon.

* with Agencies

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The Details

Article 15
Produced by: Carnival Cinemas, Zee Studios
Directed by: Anubhav Sinha
Starring: Ayushmann Khurrana, Kumud Mishra, Manoj Pahwa, Sayani Gupta, Zeeshan Ayyub
Our rating: 4/5 

If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.

When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.

How to get there: Emirates currently flies from Dubai to Orlando five times a week.
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Electoral College Victory

Trump has so far secured 295 Electoral College votes, according to the Associated Press, exceeding the 270 needed to win. Only Nevada and Arizona remain to be called, and both swing states are leaning Republican. Trump swept all five remaining swing states, North Carolina, Georgia, Pennsylvania, Michigan and Wisconsin, sealing his path to victory and giving him a strong mandate. 

 

Popular Vote Tally

The count is ongoing, but Trump currently leads with nearly 51 per cent of the popular vote to Harris’s 47.6 per cent. Trump has over 72.2 million votes, while Harris trails with approximately 67.4 million.

Disclaimer

Director: Alfonso Cuaron 

Stars: Cate Blanchett, Kevin Kline, Lesley Manville 

Rating: 4/5

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.”

About Tenderd

Started: May 2018

Founder: Arjun Mohan

Based: Dubai

Size: 23 employees 

Funding: Raised $5.8m in a seed fund round in December 2018. Backers include Y Combinator, Beco Capital, Venturesouq, Paul Graham, Peter Thiel, Paul Buchheit, Justin Mateen, Matt Mickiewicz, SOMA, Dynamo and Global Founders Capital

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The specs

Engine: Dual 180kW and 300kW front and rear motors

Power: 480kW

Torque: 850Nm

Transmission: Single-speed automatic

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THE SPECS

Engine: 6.75-litre twin-turbocharged V12 petrol engine 

Power: 420kW

Torque: 780Nm

Transmission: 8-speed automatic

Price: From Dh1,350,000

On sale: Available for preorder now

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Director: Siva
Stars: Suriya, Bobby Deol, Disha Patani, Yogi Babu, Redin Kingsley
Rating: 2/5
 
The specs

Engine: 5.0-litre V8

Power: 480hp at 7,250rpm

Torque: 566Nm at 4,600rpm

Transmission: 10-speed auto

Fuel consumption: L/100km

Price: Dh306,495

On sale: now

UAE currency: the story behind the money in your pockets
From Zero

Artist: Linkin Park

Label: Warner Records

Number of tracks: 11

Rating: 4/5