Seattle // Boeing has engaged Emirates Airline in plans to design its next-generation 777 aircraft amid expectations the carrier will be next in line to buy the wide-body jet.
Last Thursday, Lufthansa became the first airline to place an order for the long-range plane, announcing it would buy 34 777-9X.
Marty Bentrott, Boeing’s vice president of sales in the Middle East, Russia and Central Asia, refused to say whether Emirates would be next to place orders. But he said he was hopeful that Middle East carriers would be among the first customers.
“I have every confidence they [Middle East carriers] will be part of the launch of this aircraft,” Mr Bentrott said.
Tim Clark, the president of Emirates, which operates 130 777s, has said the airline plans to begin retiring the fleet by 2017.
He was quoted as telling the press in May that Emirates was planning a major order for 777X planes.
“We have been actively engaged with Emirates in the next generation 777. As the largest 777 customer in the world, they deserve our focus and our attention,” said Mr Bentrott.
“This aircraft needs to be effective for Emirates and its business plan because they have the 777 replacement cycle starting towards the end of this decade, and they expect us to be able to provide an aircraft much more efficient than today’s 777.”
Although Boeing has yet to formally launch the 777X, Boeing has already been marketing the 777X as it seeks to defend its lead over Airbus in the sales of wide-aisle aircraft.
The 777X, which competes against Airbus’s A350, burns 20 per cent less fuel and offers a 15 per cent operating improvement over the existing 777-300ER plane.
Lufthansa’s order, its largest ever, also includes 25 A350-900s.
The German airline is seeking to cut fuel usage while catching up with Middle East carriers on long-haul routes from Europe to Asia.
Separately, Boeing is gearing up for a busy Dubai Air Show that runs from November 17 to 21. At the last event two years ago, Emirates dominated the air show by making a US$18 billion order for 50 777s.
Boeing’s Mr Bentrott refused to be drawn on the potential orders likely to emerge during this year’s event.
“We are not [sure] exactly who is doing what yet,” he said. “But what I can say is [that] there are wonderful opportunities with Emirates, Etihad and Qatar.”
The 777 is among Boeing’s most successful aircraft, with 271 currently on order by Middle Eastern carriers, more than other models.
Boeing says the 777X, which features an improved interior inspired by the 787 and a composite wing, will also offer the widest cabin in its class, providing 11 per cent more space than Airbus’s A350.
The region’s carriers have ordered 126 787s, 181 737s and 71 747s.
Boeing expects the Middle East would require 2,610 new airplanes worth an estimated $550bn between this year and 2032
tarnold@thenational.ae
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How to apply for a drone permit
- Individuals must register on UAE Drone app or website using their UAE Pass
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What are the regulations?
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Key facilities
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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.”
When Umm Kulthum performed in Abu Dhabi
Known as The Lady of Arabic Song, Umm Kulthum performed in Abu Dhabi on November 28, 1971, as part of celebrations for the fifth anniversary of the accession of Sheikh Zayed bin Sultan Al Nahyan as Ruler of Abu Dhabi. A concert hall was constructed for the event on land that is now Al Nahyan Stadium, behind Al Wahda Mall. The audience were treated to many of Kulthum's most well-known songs as part of the sold-out show, including Aghadan Alqak and Enta Omri.
UAE currency: the story behind the money in your pockets
