BERLIN // Etihad Airways says it will not be rushed into deciding on a possible investment in the struggling Italian carrier Alitalia.
“It is still in early days. We are working on the process,” James Hogan, Etihad’s president and chief executive, said in Berlin yesterday.
“What is important in any transaction is that you undertake your due diligence and ensure if you are going to invest, there is a clear plan to move to profitability. We will not be rushed into making a decision.”
Yesterday’s press conference marked Etihad’s plans to build up its partnership with airberlin, in which the Abu Dhabi carrier holds a 29.2 per cent stake.
Media reports in December had said that Etihad would be buying a stake in Alitalia to save the Italian airline from its financial hardship.
For Etihad, about 20 per cent of its revenue comes via codeshare agreements and equity partners.
Besides the German investment, Etihad owns a 40 per cent stake in Air Seychelles, a 19.9 per cent stake in Virgin Australia, a 49 per cent in Air Serbia, a 3 per cent stake in Ireland’s Aer Lingus and 24 per cent in India’s Jet Airways.
Despite airberlin not yet being profitable, Mr Hogan said: “We are confident that airberlin is on the right path back to profitability.”
The two airlines, which already operate 42 weekly flights between destinations in Germany and Abu Dhabi, said that they would increase their weekly flights to 49 next month when a second daily flight to Munich was scheduled to start.
They will also start a commercial campaign in the first quarter to promote the new partnership logo in Germany, and yesterday unveiled a plane with shared livery.
Mr Hogan also said that Etihad was keen on increasing its landing slots in London’s Heathrow Airport, Europe’s busiest airport by passenger traffic.
“We operate today three times a day through Heathrow. We are very keen to acquire a fourth place via a fourth service at Heathrow. We are working with the authorities to try and achieve that,” Mr Hogan said.
He further told The National that an Abu Dhabi-based pre-customs clearance for passengers going to the United States still awaited the approval of the American authorities. Etihad and Abu Dhabi airport officials were ready for the transition, he said.
“It’s in the hands of the US authorities, so once the US authorities give approval, we are set to go,” he said. “This is a great service for travellers. The US government has already endorsed it in principle. They see the attractiveness of the pre-clearance. I just can’t wait to take advantage of it,” he added.
selgazzar@thenational.ae
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, (Leon banned).
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
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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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