Lebanon's Central Bank Governor, Riad Salameh, stated Lebanon would delay an IPO of shares in Middle East Airlines (owned by the Central Bank) that was scheduled for 2010, due to unfavourable market conditions (Bloomberg, 07-Sep-2010). Mr Salameh commented: “We need to have the proper market momentum. There is no appetite, we have to be patient. We want to really take advantage of the right moment to do it.” Mr Salameh cited the Greek debt crisis and its impact on European economies, a decline in oil prices and the weak performance of Arab stock exchanges as reasons for the delay. An announcement on who would manage the 25% stake sale had been due by the end of Jun-2010, once banks had completed due diligence, although talks are still ongoing with six unnamed banks. The carrier is valued at approximately USD1 billion and under the IPO plan, no investor would be permitted to own more than 1%, in order to guarantee broad ownership of the shares, which will be listed on Lebanon’s Stock Exchange.
Lebanon to delay IPO of Middle East Airlines
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The global commercial aircraft fleet grew by 4% in 2016 and the year ended with an order backlog of more than nine years of production. Among the regions, North America still has the biggest and oldest fleet, but the lowest ratio of orders to aircraft in service. By contrast, Middle East has the fewest in service, but the highest ratio of orders to current fleet numbers.
This report gives an overview of the number of commercial aircraft deliveries in 2016 and the outlook into 2017 and beyond. It also looks at numbers in service and on order by region. It is based on preliminary numbers from the CAPA Fleet Database and guidance on 2016 deliveries from Airbus and Boeing, who have yet to announce final numbers.
The data indicate that total worldwide deliveries fell in 2016, the first such decline for six years, as a result of delays to new aircraft programmes. Boeing delivered more aircraft than Airbus for the fifth straight year, but its deliveries fell short of its 2015 level, while Airbus increased its numbers year-on-year. Total deliveries will likely rise again in 2017, but this may prove to be a peak year.
Political uncertainty and overcapacity could sideswipe Middle East airline performance in 2017
Aviation is fundamentally a business of cycles and the Middle East has been slowly transitioning from a long upswing in traffic growth and airline profitability into a plateauing that brings with it new initiatives in partnerships and profile. Although the UAE and Qatari airlines are usually the focus of attention, it is a region with vastly differing attitudes and policies.
Persistent traffic growth, lower fuel costs and aviation friendly investment policies are keeping the underlying fundamentals in the Middle East generally positive. However, there are strong signs that the strong run of regional profitability is fading and growth rates have already retreated considerably. At the same time, Saudi Arabia is beginning to liberalise its market, perhaps promising a future larger global role.
The region is more exposed to oil price, conflict and instability influences than others and this is having its toll on GDP growth and, necessarily, on airline operations.