The wave of flight cancellations due to a surge in Covid-19 cases globally and bad weather in some locations will not hurt the airline industry's recovery during the year, according to Moody's Investors Service.
The airline industry is grappling with the dual challenges of severe weather in the US and crew getting infected with coronavirus as the highly-transmissible Omicron variant drives a surge in cases, resulting in thousands of flight cancellations and delays during the peak holiday travel season.
But the impact on the airline industry will be "fleeting", with flight cancellations posing only a "temporary problem" and the cancellations will ease in upcoming weeks as the weather improves and the infection rate declines, Moody's said in a report on Thursday.
"Bad weather and surging coronavirus infection rates materially disrupted this year’s holiday travel season, but they will not derail the airline industry’s recovery in 2022," the rating agency said. "Our global outlook for passenger airlines remains positive as we continue to expect pent-up demand for air travel to remain strong through 2022 and beyond."
Nearly 5,000 flights were cancelled and 12,689 were delayed on Thursday, according to aviation data tracker FlightAware. By Friday afternoon, 4,370 flights were cancelled. There have been more than 20,000 cancellations since Christmas Eve, representing about 5 to 10 per cent of airlines' daily schedules.
"We expect the financial impact of the cancellations to be modest, marginally lowering operating cash flow in these weeks," Moody's said. "The staffing challenges caused by the rapid spread of the Omicron variant will ease as daily infection rates decline, enabling airlines to quickly improve their operating performance relative to the past few weeks."
Passenger volumes will snap back strongly through 2022 and into 2023, driving a positive industry outlook, according to Moody's analysts.
"There remains tremendous pent-up demand for air travel, be it leisure, long-haul international or business," the report's co-authors said.
During the first quarter of 2022, governments’ travel requirements – vaccinations, negative test results, quarantines and other measures – will remain the "primary impediment" to airline bookings but such restrictions will ease with a sustained decline in average daily infection rates, the report said.
Business travel by large companies is expected to ramp up, Moody's said. The segment has lagged behind leisure travel as companies have slashed their budgets, relied on video-conferencing technologies and kept their employees off the road as part of health and safety measures.
"Before Omicron, we expected this to start in January but now expect that an improvement in business travel by large companies will be delayed to the second half of the first quarter," the report said.
Moody's projects that revenue for the 20 airline companies it rates – which accounted for about 35 per cent of the global industry’s revenue in 2019 – will reach about $275 billion in 2022, up more than 60 per cent from 2021.
With a similarly positive outlook, global consultancy Deloitte said that Covid-19 vaccines are helping to clear a path toward normalisation of air travel.
"Current macroeconomic trends suggest that demand for small- and medium-sized aircraft will continue to recover to reach pre-Covid levels in 2022, with aircraft manufacturers focused on narrow-body aircraft being well positioned to benefit from this buoyant demand," Deloitte said in its 2022 aerospace and defence industry outlook.
Merger and acquisition deals should remain strong in 2022 with innovation, technology transformation, and geopolitical and regulatory shifts driving robust deal-making across industry segments in commercial aerospace, defence and space, it said.
"Global deal activity is also likely to be driven by improved liquidity, especially at financially strong companies that may prioritise M&A to drive long-term growth," Deloitte said.
For airlines that are brave enough to look beyond Omicron, the second quarter of the year looks positive, aviation data firm OAG said in a report.
Strong pent-up demand has already resulted in carriers adding back aircraft such as the Airbus A380 and reopening long-haul routes in many markets, suggesting that air travel demand is improving, OAG said.
"Things are getting better but as we have always said, there will be bumps in the road to recovery; some steeper and deeper than others. We do just need to get past the first quarter of 2022, as indeed getting through the first quarter has always been the crucial period in this industry," OAG analyst John Grant said.
Global airline capacity ended 2021 at 5.7 billion seats compared with the 8.7 billion reported in 2019, which is 35 per cent below pre-Covid levels, according to OAG data.
UAE currency: the story behind the money in your pockets
Sole survivors
- Cecelia Crocker was on board Northwest Airlines Flight 255 in 1987 when it crashed in Detroit, killing 154 people, including her parents and brother. The plane had hit a light pole on take off
- George Lamson Jr, from Minnesota, was on a Galaxy Airlines flight that crashed in Reno in 1985, killing 68 people. His entire seat was launched out of the plane
- Bahia Bakari, then 12, survived when a Yemenia Airways flight crashed near the Comoros in 2009, killing 152. She was found clinging to wreckage after floating in the ocean for 13 hours.
- Jim Polehinke was the co-pilot and sole survivor of a 2006 Comair flight that crashed in Lexington, Kentucky, killing 49.
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The specs: 2018 Nissan 370Z Nismo
The specs: 2018 Nissan 370Z Nismo
Price, base / as tested: Dh182,178
Engine: 3.7-litre V6
Power: 350hp @ 7,400rpm
Torque: 374Nm @ 5,200rpm
Transmission: Seven-speed automatic
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Starring: Mahmoud Bakri, Aram Sabbah, Mohammad Alsurafa
Rating: 4.5/5
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Founders: Michele Ferrario, Nino Ulsamer and Freddy Lim
Started: established in 2016 and launched in July 2017
Based: Singapore, with offices in the UAE, Malaysia, Hong Kong, Thailand
Sector: FinTech, wealth management
Initial investment: $500,000 in seed round 1 in 2016; $2.2m in seed round 2 in 2017; $5m in series A round in 2018; $12m in series B round in 2019; $16m in series C round in 2020 and $25m in series D round in 2021
Current staff: more than 160 employees
Stage: series D
Investors: EightRoads Ventures, Square Peg Capital, Sequoia Capital India
Benefits of first-time home buyers' scheme
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Engine: 51.5kW electric motor
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The utilitarian robe held dear by Arab women is undergoing a change that reveals it as an elegant and graceful garment available in a range of colours and fabrics, while retaining its traditional appeal.
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History's medical milestones
1799 - First small pox vaccine administered
1846 - First public demonstration of anaesthesia in surgery
1861 - Louis Pasteur published his germ theory which proved that bacteria caused diseases
1895 - Discovery of x-rays
1923 - Heart valve surgery performed successfully for first time
1928 - Alexander Fleming discovers penicillin
1953 - Structure of DNA discovered
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1979 - MRI, or magnetic resonance imaging, scanned used to diagnose illness and injury.
1998 - The first adult live-donor liver transplant is carried out
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Simon Nadim has completed 7,000 dives.
The hardest dive in the UAE is the German U-boat 110m down off the Fujairah coast.
As a child, he loved the documentaries of Jacques Cousteau
He also led a team that discovered the long-lost portion of the Ines oil tanker.
If you are interested in diving, he runs the XR Hub Dive Centre in Fujairah
Tightening the screw on rogue recruiters
The UAE overhauled the procedure to recruit housemaids and domestic workers with a law in 2017 to protect low-income labour from being exploited.
Only recruitment companies authorised by the government are permitted as part of Tadbeer, a network of labour ministry-regulated centres.
A contract must be drawn up for domestic workers, the wages and job offer clearly stating the nature of work.
The contract stating the wages, work entailed and accommodation must be sent to the employee in their home country before they depart for the UAE.
The contract will be signed by the employer and employee when the domestic worker arrives in the UAE.
Only recruitment agencies registered with the ministry can undertake recruitment and employment applications for domestic workers.
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Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024.
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Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages].
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Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts.
With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians.
Following the single’s success, the idea to stage a rock concert evolved.
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The biog
From: Ras Al Khaimah
Age: 50
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Dr Ayham Ammora, scientist and business executive
Ali Azeem, business leader
Tony Booth, professor of education
Lord Browne, former BP chief executive
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Professor Wyn Evans, astrophysicist
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Gina MIller, anti-Brexit campaigner
Lord Smith, former Cabinet minister
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F1 The Movie
Starring: Brad Pitt, Damson Idris, Kerry Condon, Javier Bardem
Director: Joseph Kosinski
Rating: 4/5
The specs
Engine: 2.0-litre 4cyl turbo
Power: 261hp at 5,500rpm
Torque: 405Nm at 1,750-3,500rpm
Transmission: 9-speed auto
Fuel consumption: 6.9L/100km
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If you go
The flights
There are various ways of getting to the southern Serengeti in Tanzania from the UAE. The exact route and airstrip depends on your overall trip itinerary and which camp you’re staying at.
Flydubai flies direct from Dubai to Kilimanjaro International Airport from Dh1,350 return, including taxes; this can be followed by a short flight from Kilimanjaro to the Serengeti with Coastal Aviation from about US$700 (Dh2,500) return, including taxes. Kenya Airways, Emirates and Etihad offer flights via Nairobi or Dar es Salaam.
ETFs explained
Exhchange traded funds are bought and sold like shares, but operate as index-tracking funds, passively following their chosen indices, such as the S&P 500, FTSE 100 and the FTSE All World, plus a vast range of smaller exchanges and commodities, such as gold, silver, copper sugar, coffee and oil.
ETFs have zero upfront fees and annual charges as low as 0.07 per cent a year, which means you get to keep more of your returns, as actively managed funds can charge as much as 1.5 per cent a year.
There are thousands to choose from, with the five biggest providers BlackRock’s iShares range, Vanguard, State Street Global Advisors SPDR ETFs, Deutsche Bank AWM X-trackers and Invesco PowerShares.
