Bahrain will likely need further Gulf financial support

World Trade Center skyscraper and skyline of Manama City. November 14, 2015 in Manama, Kingdom of Bahrain. (Shutterstock)
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Updated 25 January 2021

Bahrain will likely need further Gulf financial support

DUBAI: Bahrain will likely need further financial support from its Gulf neighbors despite reform measures, Fitch Ratings’ lead Bahrain analyst Toby Iles said on Monday.
Iles said Bahrain, a small oil producer, was likely to likely need the support from 2023 onwards and cited Fitch’s oil price assumption.
In 2018, Saudi Arabia, the United Arab Emirates and Kuwait came to Bahrain’s aid with a five-year zero-interest $10.25 billion package to help it avoid a credit crunch.


Lufthansa posts record annual loss

Updated 16 min 16 sec ago

Lufthansa posts record annual loss

  • Europe’s biggest airline said it expects to book an operating loss again in 2021
  • The group’s current fleet of 800 aircraft will be slashed to 650 by 2023

FRANKFURT: German flag carrier Lufthansa said Thursday it lost a record €6.7 billion ($8.1 billion) in 2020, as the coronavirus pandemic wiped out demand for travel and left aircraft grounded.
Europe’s biggest airline said it expects to book an operating loss again in 2021, although smaller than last year, as capacity runs at only 40-50 percent of pre-pandemic levels for the full year.
Underlining the long road to recovery, it added that capacity will climb to 90 percent of 2019’s level only in “the middle of the decade.”
After borders slammed shut as governments scrambled to halt the first wave of the COVID-19 crisis, the airline faced an uncertain future.
In June, it was offered a lifeline by the German government, which pumped in nine billion euros for a 25 percent stake.
“The past year was the most challenging in the history of our company — for our customers, our employees and our shareholders,” said Lufthansa chief executive Carsten Spohr.
In the airline’s home base, demand is sluggish with work from home orders curtailing lucrative business travel while official warnings are in place against leisure tourism in many countries worldwide.
Across Europe, restrictions are also in place as governments continue to battle rising infection numbers.
Lufthansa is currently flying about 20 percent of its capacity, with little improvement expected in the next one to two months.
But it expects demand to pick up again in the summer with a vaccination rollout progressing and more capacity for tests available.
“Internationally recognized digital vaccination and test certificates must replace travel bans and quarantine,” Spohr stressed, repeating calls by other airline bosses.
Lufthansa, which includes subsidiaries Swiss, Austrian, Brussels Airlines and Eurowings, operated only 31 percent of its overall capacity last year.
Revenues sank 63 percent to €13.6 billion for 2020, compared to €36.4 billion in 2019.
The operating loss came in at €5.5 billion, while a year ago, the airline’s comparative adjusted earnings before interest and tax stood in the black at €2.0 billion.
Although it has put much of its staff on curtailed hours and brought its headcount down from a pre-pandemic 141,000 to 110,000 currently, another 10,000 jobs are still on the line.
Over the last months, it has done deals with unions representing pilots and ground crew so as to head off forced redundancies until March 2022.
Pilots agreed to short hour arrangements and corresponding salary cuts while ground staff signed on to giving up bonuses and pay raises to save their jobs.
The group’s current fleet of 800 aircraft will be slashed to 650 by 2023.
Lufthansa’s woes mirror those of its competitors elsewhere.
Industry group IATA, which represents 290 major airlines worldwide, warned last week that global air passenger traffic will recover more slowly than expected this year because coronavirus variants have created strong headwinds.
The International Air Transport Association now estimates that traffic will reach between 33 and 38 percent of the levels recorded in 2019.
Its previous 2021 forecast was for traffic to reach 51 percent of the levels seen before the coronavirus pandemic struck.


Texas power grid operator fires CEO after deadly blackouts

Updated 17 min 23 sec ago

Texas power grid operator fires CEO after deadly blackouts

  • The mid-February storm temporarily knocked out up to half the state’s generating plants

BENGALURU: Texas’ power grid operator ousted chief executive Bill Magness on Wednesday, as the fallout continues from a deadly blackout last month that left residents without heat, power or water for days.
His departure followed fierce criticism by state lawmakers of the handling of the crisis by the Electric Reliability Council of Texas (ERCOT), which has led one large electricity provider to seek bankruptcy and put several others near to it.
The mid-February storm temporarily knocked out up to half the state’s generating plants, triggering outages that killed dozens and pushed power prices to 10 times the normal rate.
“ERCOT’s decision to oust CEO Bill Magness signals accountability for the disaster that swept through our state two weeks ago,” Texas Attorney General Ken Paxton said in a statement on Twitter.
“(This step) offers the opportunity for new leadership that can more efficiently prepare and direct our state’s resources when dangerous weather strikes,” he added.
Texas Lt. Governor Dan Patrick, who on Monday called for the heads of ERCOT and the Public Utility Commission to resign, also welcomed the move.
The legislature now can begin “fixing what went wrong,” Patrick said.
ERCOT said in a statement cited by multiple media organizations that its board had directed that Magness be given a 60 days’ termination notice. The board would begin an immediate search for a new CEO.
Brad Jones, former head of New York’s power grid, is the leading candidate to replace Magness as ERCOT’s CEO, Bloomberg reported, citing people familiar with the board’s thinking.
Magness was grilled for hours last week for leaving power prices at up to 450 times the usual rate after the threat to the state’s grid had ended.
Seven of ERCOT’s 15 directors have resigned in the last week and the head of the state’s Public Utility Commission, which supervised ERCOT, resigned on Monday.
The winter storm caused widespread blackouts across Texas, a state unaccustomed to extreme cold, knocking out power to more than 4 million people at its peak.


Three Chinese companies may invest $1 billion in Sudan says minister: Asharq Business

Updated 29 min 36 sec ago

Three Chinese companies may invest $1 billion in Sudan says minister: Asharq Business

  • Agriculture, petroleum and mining targeted
  • Chines firms lured by investment law reforms

DUBAI: Sudan’s Minister of investment, Al Hadi Muhammed Ibrahim, met with a Chinese delegation from three companies, that may invest up to $1 billion in Sudan, he told Asharq Business on Wednesday.
The investments would target the agriculture, mining and petroleum fields, he said.
Ibrahim confirmed that the projects would be offered in a transparent way and would be open to competitive bidding.
He stressed to the visiting delegation that Sudan’s legal system set a clear path to protect the investor and the state.
Ibrahim said that the Chinese delegation had been attracted by recent changes to the country’s investment law which provides a package of incentives and tax exemptions.
“We have restructured the ministry and started improving the investment environment,” he said. “So the investor will come and find all the procedures in one portal with easy and strict procedures,” he said.


Saudi developer Alandalus Property profits fall on pandemic retail and hospitality hit

Updated 04 March 2021

Saudi developer Alandalus Property profits fall on pandemic retail and hospitality hit

  • Mall operations hit by pandemic
  • Regional retail groups consolidate

DUBAI: Saudi developer Alandalus Property reported a 78 percent decline in net profit last year to SR14.3 million ($3.8 million) as the pandemic weighed on its hotels and malls business.
It discounted rents for mall tenants in response to the COVID-19 pandemic, the company said in a filing to the Saudi stock exchange on Thursday.
Still, overall sales dipped just 4.7 percent to SR167.8 million, reflecting strong underlying demand for property in the Kingdom.
Real estate and retail groups throughout the region have been hit hard by the pandemic with many forced to reduce operations and cut costs.
Dubai developer Emaar Properties on Tuesday said it was buying out minority shareholders of its shopping center unit, less than a decade after floating shares in the company.
The all-share deal came as both businesses have seen profits plunge over the past year due to the coronavirus pandemic as fewer overseas visitors travel to Dubai.


Oil strengthens ahead of key OPEC+ meeting

Updated 04 March 2021

Oil strengthens ahead of key OPEC+ meeting

  • Oil up for a second session
  • US stockpiles surged last week

SINGAPORE: Oil prices rose for a second straight session on Thursday, as the possibility that OPEC+ producers might decide against increasing output at a key meeting later in the day lent support, alongside a drop in U.S. fuel inventories.
Brent crude futures added 61 cents, or 1 percent, to $64.68 a barrel, in early trade, after climbing more than 2 percent on Wednesday. U.S. West Texas Intermediate (WTI) crude futures gained 28 cents, or 0.5 percent to $61.56 a barrel.
The Organization of the Petroleum Exporting Countries (OPEC) and allies, together called OPEC+, are considering rolling over production cuts into April instead of raising output, as a recovery in oil demand remains fragile due to the coronavirus crisis, three OPEC+ sources told Reuters.
The market had been expecting OPEC+ to ease production cuts by around 500,000 barrels per day (bpd) from April.
"OPEC+ is currently meeting to discuss its current supply agreement. This raised the spectre of a rollover in supply cuts, which also buoyed the market," ANZ said in a report
U.S. crude oil stockpiles surged by a record of more than 21 million barrels last week as refining plunged to an all-time low due to the Texas freeze that knocked out power for millions.
With refiners unable to process crude, gasoline and distillate inventories also dropped dramatically, especially in the Gulf Coast region where their declines set records, the U.S. Energy Information Administration said on Wednesday.
"Prices hinge on Russia's and Saudi Arabia's preference to add more crude oil production," said Stephen Innes, global market strategist at Axi.
"Perhaps more interesting is the lack of U.S. shale (production) response to the higher crude oil prices, which is favourable for higher prices."