TODAY: Bahri’s fleet upgrade gets a financing boost + Iraq inks a gas supply agreement with Turkmenistan

Good morning, folks. It’s a relatively calm news morning for the regional logistics sector, but we have some financing updates from Bahri as fleet modernization plans push through and news from Oman on road development projects. First, a quick look at the ongoing Boeing strike saga…

THE BIG LOGISTICS STORY- Boeing has reached a tentative agreement to offer striking machinists a 35% pay bump over the course of four years as the airline giant seeks to put an end to a five-week-long strike that has crippled production of some of its more popular aircraft. The offer includes a one-time USD 7k ratification bonus and increased employer contributions to worker retirement accounts, but is lower than the union’s targeted 40% pay bump and does not include the reinstitution of defined benefit pensions, another of the union’s key demands.

REMEMBER- Boeing took its 30% pay raise offer off the table last week in union negotiations after the talks reached a stalemate yet again. The strike is taking place at Boeing’s 737 Max Jets production hub. This has worsened the company’s already existing supply chain issues and delivery delays, pushing them to stop issuing purchase orders for the 737, 767 and 777 jets to preserve the company’s credit rating.

Union members are set to vote on the contract on Wednesday, the same day that Boeing is expected to release its 3Q 2024 earnings results.

The story grabbed a lot on ink in the int’l press over the weekend: Reuters | AP | Bloomberg | Financial Times | Wall Street Journal | The New York Times | Washington Post | CNN | BBC

IN OTHER BOEING NEWS – The company is considering an asset sale to boost its finances, potentially shedding its non-core or underperforming units, the Wall Street Journal reports. Boeing has asked the heads of its subunits to present the value of their units to the firm. The manufacturer finalized an agreement last week to offload a small defense unit that develops US military surveillance equipment, the news outlet said, citing sources familiar with the matter. Boeing declined to comment on the report.

ICYMI: Boeing announced plans last week to raise USD 25 bn through stock and debt offerings and another USD 10 bn through credit from major lenders. The move comes as the company struggles to maintain its credit rating, which is currently a notch above junk, and ahead of USD 11.5 bn of the company’s debt maturing through 1 February 2026.

Boeing’s under the microscope: The US Federal Aviation Administration (FAA) is slated to launch a new three-month safety review of Boeing, Reuters reported on Friday. This includes evaluating risk-assessment quality, resource allocation, and compliance with regulatory requirements. Regular reviews of Boeing’s manufacturing operations are set to take place, an FAA said.

HAPPENING TODAY-

The Smart Ports & Logistics Transformation Summit will kick off today in Riyadh and wrap tomorrow. The two-day conference aims to discuss strategies, innovation, and technologies in line with Saudi Arabia’s Vision 2030, which aims to position KSA as a logistics hub in the MENA region.

WATCH THIS SPACE-

#1-Egypt’s airport privatization plans are already attracting suitors: Six international companies have shown interest in managing and operating airports being offered up by the Egyptian government, Egyptian Civil Aviation Minister Sameh Elhefny told Al Mal on Saturday. The news comes hot on the heels of unconfirmed reports that the International Finance Corporation has submitted its technical study and proposed timeline for handing over management of 20 of Egypt’s airports to the private sector.

Elhefny was keen to emphasize (again) that the airports will remain Egyptian: The airports are not for sale and remain under the sovereignty of the Egyptian state, Elhefny told the outlet. Instead, the offering involves the management and operation of the commercial activities within the airports.

REMEMBER- We’ve been on the lookout for airport privatization news since Egypt’s Prime Minister Moustafa Madbouly said last week that some “important” updates regarding the country’s plans to privatize airports and banks would be announced soon. The Madbouly government first revealed in November 2023 that it planned to invite private sector players — including foreign companies — to take over the management of airports in the country.

IN OTHER EGYPT UPDATES- It looks like Port Said’s EGP 1.6 bn grain silo factory has lost its foreign partner: The Egyptian arm of Polish grain silo company Feerum has reportedly pulled out of an agreement to set up a factory to manufacture grain silos with with Egyptian construction and engineering firm Samcrete and the state-owned Egyptian Holding Company for Silos and Storage, an unnamed Feerum Egypt official told Al Mal. The company official pointed to the Supply Ministry canceling an order for a silo — which hampered the negotiations with local banks over financing — among other undisclosed reasons.

#2- Etihad Airways is in early discussions for a potential widebody-aircraft order with Boeing and Airbus, as the airline looks to double its fleet in the coming years, Bloomberg reported on Thursday, citing people with knowledge of the matter. The carrier is deliberating the uptake of twin-aisle jets to bolster its long-distance capabilities, and will likely be deciding between the Boeing 777X and Airbus A350, the sources said. The airline may not follow through with an order anytime soon, however, as options are still being evaluated. Etihad and Boeing declined to comment on the matter, while Airbus declined to comment on any specifics, but noted it was always maintaining talks with customers.

#3- ExxonMobil eyes investments in Algeria: US energy giant ExxonMobil is eyeing Algeria’s National Agency for the Valorisation of Hydrocarbon Resources’ (Alnaft) international tenders for upstream oil and gas projects, MENA vice president Rochdi Younsi told Asharq Business on Thursday. The company has been in talks with Algeria’s state-owned oil company Sonatrach since May and Alnaft as it looks to develop gas fields in the country.

#4- Qatar’s MOT rolls out a new logistics national strategy: Qatar’s Transport Ministry has laid out a new strategy for the logistics services sector, with a specific focus on transportation and warehousing for 2024-2030, according to a statement released on Thursday. The strategy aims to boost local logistics services, streamline cross-border operational processes, facilitate transshipments, and enhance trade flows to create new investment windows in Qatar.

#5- Russia using yet another Dubai firm in shadow fleet operations: A newly established company in Dubai has taken control of three liquefied natural gas tankers (LNG) in what appears to be a Russian attempt to circumvent Western sanctions, Bloomberg reported on Friday. Russia is using a network of shell companies — stretching from Dubai to China — to transfer gas from the US-sanctioned Arctic LNG 2 facility.

UAE links: Former Russian-managed vessels — the Velikiy Novgorod, Pskov, and La Perouse — have had aspects of their management transferred to Dubai-based firm Matias Ship Management in September. The company’s address is at the same location as Dubai’s Nur Global Shipping — another company suspected of gathering Russia’s shadow fleet. The three vessels have been serving the smaller Portovaya LNG export plant on Russia’s Baltic shore, which hasn’t been subjected to Western sanctions; however, the UK sanctioned Velikiy Novgorod earlier this week and La Perouse last month.

Clandestine moves: Several companies with alleged links to Russia — largely registered in the UAE — have been acquiring dozens of LNG vessels as part of a plan by Moscow to expand its dark fleet operations. Since 2Q 2023, more than 50 LNG vessels have changed ownership to UAE-based companies. The developments in the LNG tanker market could point “to a complex network of maritime operations potentially linked to Russian interests,” data and analytics group Kpler told the Financial Times back in July.

#6- Bahrain is looking to build a new airport that would replace Bahrain International Airport (BIA) after it reaches its maximum capacity by 2035, Transport Minister Mohammed Al Kaabi told The National at Routes World. The greenfield project is part of the country’s plan to boost tourism and air connectivity. The new airport would have a capacity of 40 mn to 50 mn annual passengers, a jump from BIA’s current 14 mn annual passengers. “We are also evaluating the financial model. Will the government handle the project entirely or enter into partnership with the private sector? All options are on the table,” the minister said.

#7- Brazilian plane manufacturer Embraer is studying the possibility of building a new aircraft, CEO Francisco Gomes Neto told CNBC on Friday. The new plane could potentially allow the company to compete with larger rivals Airbus and Boeing, which deliver hundreds of jets a year compared with Embraer’s dozens of aircraft. However, “at this point in time, we don’t have concrete plans to go to a big narrow body,” Gomes Neto said, adding that the planemaker is focused on improving results and selling its regional planes.

Making moves: The Federal Aviation Administration approved a freighter version of its E190 passenger-to-freighter converted jet earlier this month. “This is maybe the advantage we have: We have a great product [that’s] available,” Gomes Neto said. Embraer delivered 16 commercial jets in 3Q 2024 — a 5% y-o-y increase. Including its defense and business jets, the company delivered over 57 jets during the period, a third more than last year.

Supply chain strains? Embraer is also facing post-pandemic supply chain constraints, with shortages in engines, hydraulic valves, and carbon cabin interiors. The supply chain problems are likely to ease in 2026, Gomes Neto added.

MARKET WATCH-

#1- Oil prices steadied in early morning trading in response to easing concerns over the potential disruption to oil supply in the MENA, Reuters reports. Brent crude futures rose USD 0.08 to trade at USD 73.14 per barrel by 01.20 GMT, while US West Texas Intermediate (WTI) futures gained USD 0.10 to trade at USD 69.32 per barrel. Oil prices dropped 7% last week as concerns over oil demand in China grew on the back of weak economic growth.

#2- Saudi Arabia was a top consumer of Russian fuel oil and vacuum gasoil (VGO) last month, making it the second largest buyer after China, Reuters reports, citing LSEG data. In September, total fuel oil and VGO exports from Russian ports climbed 2% from August, reaching around 4.2 mn metric tons, out of which some 0.7 mn tons were Saudi-bound — that is a 10% m-o-m dip following the end of peak summer demand.

#3- Baltic index continues to fall: The Baltic Exchange’s dry bulk sea freight index — which tracks rates for the capesize, panamax, and supramax vessel segments — declined about 1.1% to 1576 points on Friday, registering at its lowest since April. The capesize index dropped 46 points to 2,276 points, while the panamax index shed 3 ponts to 1,285. The smaller supramax dipped 4 points to 1,250.

#4- The Drewry World Container Index fell by 4% to USD 3,216 per 40-ft container on Thursday, according to the latest index readings. Spot rates for 40-ft containers are now 69% below the previous pandemic peak of USD 10.4k in September 2021, but remains 126% above the pre-pandemic rate of USD 1.4k. The average composite index YTD is USD 4,058 per 40ft container, which is USD 1,225 higher than the 10-year average rate of USD 2,834.

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CIRCLE YOUR CALENDAR-

The UAE will host the International Conference on Tourism, Transport, and Logistics on Saturday, 26 October and Sunday, 27 October in Dubai. The event will gather scientists, scholars, and engineers from around the world to discuss new ideas and research development projects in the industry.

Saudi Arabia will host the Saudi Airport Exhibition on Monday, 11 November and Tuesday, 12 November in Riyadh. The two-day exhibition will bring together global industry leaders to discuss the latest technologies around the world in the aviation industry. It looks to encourage discussion between Saudi aviation leaders and the global supply chain industry.

The UAE will host the ADIPEC Maritime and Logistics Exhibition and Conference on Monday, 11 November and Thursday, 14 November in Abu Dhabi. The event looks to explore ways to reduce emissions through innovative solutions. It will bring together industry leaders, regulators and decision makers in the global maritime and logistics sector.

Bahrain will host The Bahrain International Airshow on Wednesday, 13 November and Friday, 15 November near Awali. The three-day event is bringing together over 180 participating companies from over 59 represented nations globally.

Check out our full calendar at the bottom of this email for a comprehensive listing of upcoming news events and news triggers.