The case for a Gulf aviation mega-merger

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WHAT WE’RE TRACKING TODAY

TODAY: Could the Gulf build an aviation supercarrier?

Good morning, friends. We have a packed issue for you this morning — but first, we lead with a question: Could the Gulf’s aviation giants ever join forces to create a regional supercarrier, or are national interests too deeply embedded in the industry for a mega-merger to ever leave the runway?

Meanwhile, Hormuz is turning into a tightly choreographed energy corridor, with Iraq and Pakistan striking separate arrangements with Iran to secure the transit of oil and LNG cargoes — a sign that flows are continuing, but only on highly managed, case-by-case terms.

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RAIL — Saudi Arabia Railways launched a tender for design consultancy services for its portion of the GCC railway project, MEED reports. The services include the design of a 672-km rail corridor extending from Khafji in the Eastern Province to Al Batha on the UAE border, with bids due by 30 June.

REFRESHER: The GCC railway project is a 2.1k-km railway that aims to link the six GCC member states. Numerous delays have long stalled the project, which was projected to cost around USD 15 bn back in 2023.

AVIATION — Regional airports face losses amid aviation disruptions: Nine major Middle East airports are estimated to have lost between USD 900 mn and 1 bn in revenue over March and April as regional conflict forced airspace closures, flight cancellations, and network-wide cuts across Gulf hubs, according to a note from the Airports Council International Asia-Pacific & Middle East. During this period, the airports operated at an average of just 53% of pre-conflict scheduled capacity, while passenger traffic declined by around 27 mn travelers — a 54% y-o-y drop — against a budgeted USD 1.3-1.4 bn revenue base.

The cargo bleed was just as sharp: Freight volumes across the nine airports fell 52% y-o-y to 571k tons, down from around 1.2 mn tons a year earlier. March marked the lowest point, with cargo volumes falling 59% y-o-y to 259k tons, before partially recovering in April to 312k tons — which is still 43% below last year’s level.

SUPPLY CHAINS — Commodity supply chain investments incoming? DP World and ADQ-backed agribusiness Al Dahra are eyeing fresh investments in port and logistics infrastructure, cold chain and warehousing solutions, and agri-food processing hubs as part of a wider push to support end-to-end food and agricultural commodity supply chains across the GCC, according to a statement. The partnership will also see Al Dahra gain access to sourcing corridors across Africa, Eastern Europe, Central Asia, and the Americas.

Why it matters: The UAE imports around 85-90% of its food, making resilient sourcing, storage, and distribution capacity a strategic pressure point — especially as the ongoing closure of the Strait of Hormuz heightens supply-chain vulnerabilities. Some 70% of the region’s food imports go through the strait, which has forced logistics players to resort to trucking and air freight to plug the gap.

Market watch

Oil prices rose this morning ahead of the Trump-Xi meeting as the Iran conflict disrupts oil supplies, Reuters reports. Brent crude futures increased USD 0.26 to trade at USD 105.89 / bbl by 02.50 GMT, while US West Texas Intermediate (WTI) gained USD 0.32 to USD 101.34 / bbl.

Over in Opec land, the oil cartel slashed its global oil demand growth forecast to 1.17 mn bbl / d from the 1.38 mn bbl / d projected last month, according to its latest monthly report (pdf). The revision is a step down from the demand narrative Opec had defended for months.

Twice in a row: The group now expects global oil demand to average 104.6 mn bbl / d in 2Q, down from the 105 mn bbl / d forecast last month. The forecast cut indicates that Opec has now slashed its 2Q demand expectations by nearly 1 mn bbl / d in the span of two months.

DISCLAIMER- The April figures include the UAE, which formally exited Opec earlier this month. Check our deep dive on the exit here and a much deeper dive on the UAE’s strategy here.

The Baltic Index maintains its rising trajectory: The Baltic Exchange’s dry bulk index — which tracks rates for the capesize, panamax, and supramax vessel segments — was up 4.1% to 3,189 on Wednesday. The capesize jumped 5.1%% to 5,340 points, while the panamax index increased 4% to 2,454. The smaller supramax inched up 1.2% to 1,553 points.

PSA

Maersk adds surcharge on heavy boxes: Danish carrier Maersk will apply a USD 250 Heavy Load Surcharge on 20-ft and 40-ft dry containers traveling from North Europe and the Mediterranean to Central America, Mexico, and the west coast of South America, effective 12 June. The charge applies to shipments exceeding 20 tons for 20-ft containers and 25 tons for 40-ft containers — covering all ocean products except SPOT and Maersk Go.

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Two giants, one carrier?

Could the Gulf create an aviation supercarrier? A Gulf mega-merger may look formidable on paper: two aviation heavyweights combining forces to consolidate long-haul traffic flows, coordinate hub operations, and trim overlapping capacity — creating an airline group with even greater leverage over aircraft manufacturers, airports, lessors, and suppliers. But the real question is far simpler than it sounds.

“Airline mergers are complex — and when they’re at the national level, they become even more complex,” Henry Harteveldt, president and travel industry analyst at Atmosphere Research Group, tells EnterpriseAM. Gulf carriers, he notes, are more than commercial airlines — they serve strategic national interests, particularly during times of crisis or emergency.

The UAE supercarrier scenario

“An Emirates-Etihad tie-up is probably the only Gulf merger that really makes strategic sense,” Wouter Dewulf, professor of air transport management and economics at the University of Antwerp, tells EnterpriseAM. Both airlines are based in the same country, operate from neighboring emirates, and run hubs just 140 km apart — making it the closest thing to a logical consolidation scenario in Gulf aviation, he argues.

The appeal begins with the balance of assets: Emirates brings global scale, brand power, long-haul density, Dubai’s hub infrastructure, and one of the world’s largest passenger and cargo platforms. Etihad Airways, meanwhile, has regained momentum in recent years and gives Abu Dhabi its own credible aviation platform, complete with a distinct hub, network, premium positioning, and national identity.

But this would be far more than a conventional airline merger: “Together, they would create something much larger than a normal airline group,” Dewulf says. “It would effectively become a UAE aviation platform: two hubs, two airport systems, two logistics ecosystems, two tourism strategies, and one expanded global network engine.”

The strategic attraction lies in network control: A combined Emirates-Etihad entity could tighten its grip on major long-haul corridors — including Europe-Asia, Europe-India, Africa-Asia, and broader Middle East transit flows — by reducing overlapping capacity, coordinating schedules, and deepening feeder traffic into both hubs.

Cargo could prove just as important: “A mixed Emirates-Etihad platform would unite substantial belly-hold capacity, freighter operations, pharmaceutical logistics, e-commerce flows, and the UAE’s broader logistics infrastructure,” Dewulf tells us.

Who would feel the pressure first?

The first shockwaves would likely hit airlines across the Gulf and the wider Middle East. “A merged Emirates-Etihad would put pressure on almost everyone around it,” Dewulf adds. Smaller regional carriers, he argues, would face a far more formidable competitor in the battle for feeder traffic, corporate accounts, cargo flows, and even access to aircraft capacity.

Mid-sized airlines could also find themselves squeezed. Carriers that rely on niche long-haul routes would struggle to defend their position. At the same time, European and Asian airlines would face a stronger sixth-freedom rival funneling passengers between Europe, Asia, Africa, and the Indian subcontinent through an expanded UAE network.

The impact would not stop with airlines: “Fewer airlines means less brand choice and less price competition. That’s not good for consumers,” says Harteveldt. A merged carrier could become more profitable simply because it would no longer need to compete as aggressively on fares, he argues. However, passengers would lose some of the competitive tension that currently exists between Emirates, Qatar Airways, Gulf Air, Oman Air, and other regional players, Harteveldt adds.

Could a merged Gulf group have an upside?

Even with the structural and political constraints, there is still a case that a combined Gulf airline group could unlock meaningful efficiencies if executed carefully. Despite squeezing the price rates, it would give the consumer more options for the same route. “Let’s say the airline is competing on the London to Sydney route: Qantas is expected to operate its non-stop Project Sunrise service at some point. A single airline group could respond not only with multiple daily departures via one hub but [also with] additional frequencies routed through two or three different hubs,” Harteveldt argues.

Scale would also sharpen procurement power. “Instead of buying 20 airplanes, maybe you’re buying 200,” Harteveldt says. “From a procurement standpoint, the larger you are, the more negotiating clout you have — whether it’s fuel, catering, airport contracts, or consulting services, you’re negotiating at a much larger volume.”

The strait exception

Iraq and Pakistan have struck separate agreements with Iran to secure the transit of oil and LNG cargoes through Hormuz, Reuters reports, citing sources it says have knowledge of the matter.

Iraq gets the crude through

The crude track: Iraq secured Iranian approval for two VLCCs, each carrying around 2 mn barrels of crude. The vessels crossed Hormuz after Baghdad submitted detailed cargo and vessel documentation, including ownership, destination, and shipping specifications — underscoring how tightly managed the approval process has become.

Not business as usual: “Two tankers being allowed to pass through the Strait does not necessarily mean regular traffic will be re-established,” global oil markets strategist and former head of research at Onyx group Harry Tchilinguirian tells EnterpriseAM. Iraq may have a better shot at securing passage because of its alignment with Tehran, but the sanctions risk remains the hard limit. “Any payment to Iran for safe passage through Hormuz would constitute a violation of US sanctions,” he says.

Pakistan’s LNG lane gets messy

The LNG track: Pakistan has separately arranged for Qatari LNG cargoes to move through Hormuz under a Tehran-mediated framework designed to secure energy imports amid tightening regional supply conditions. But execution has been uneven, with one Qatar-loaded LNG carrier bound for Pakistan turned back after attempting to cross Hormuz, highlighting the fragility of what remains a case-by-case clearance system.

Pakistan’s Iran option is born of risk, not strategy: “Most of Pakistan’s LNG imports used to come from Qatar on a long-term contractual basis but also from the UAE,” Tchilinguiria notes. “Both suppliers are exposed to the current regional tensions and the risk of further Iranian attacks. Pakistan, therefore, may have to turn toward Iran to meet domestic demand, with Iran becoming the geographically closer and potentially more secure alternative,” he adds.

The new Hormuz logic

A broader trend? Other energy-importing states are reportedly exploring similar arrangements with Tehran as supply security concerns intensify, particularly across Asia. The shift reflects a growing willingness to trade standardized maritime neutrality for ensured, transaction-specific passage.

The strategic implication: Hormuz is increasingly functioning less as a universally open international waterway and more as a managed corridor — where access is contingent on prior Iranian authorization.

Earnings are in from Adnoc Gas + AD Ports

Adnoc Gas records a softer 1Q on the back of Hormuz disruptions

Adnoc Gas feels the export squeeze: Adnoc Gas has joined the list of firms hit by the repercussions of the Hormuz closure, as slowing export flows pushed net income down 15% y-o-y to USD 1 bn in 1Q 2026, according to its financial release (pdf). The firm’s revenue also dropped 18% y-o-y to USD 5 bn during the quarter.

Lower volumes pressure: Domestic gas sales volumes fell 11% y-o-y to 519 TBTU on weaker gas-to-power demand and cooler weather. Meanwhile, export and traded liquids volumes dropped 20% to 202 TBTU after the Hormuz closure curbed the company from exporting LPG, naphtha, and LNG in March.

The fallout is expected to spill into 2Q: Adnoc Gas warned that the strait’s closure could shave USD 400-600 mn off net income in the second quarter, assuming maritime operations normalize before quarter-end. Even so, management still expects FY 2026 net income of USD 3.5-4 bn, helped by stronger LNG and LPG pricing in 2H if shipping routes reopen. The firm is targeting an 80% restoration rate by year-end, according to the firm’s management discussion and analysis report (pdf).

Full operational recovery could take a while: Once Hormuz reopens, shipments should resume “within a reasonable time frame,” though CFO Peter Van Driel told Bloomberg (watch, runtime: 07:44), “we simply don’t know.”

AD Ports delivers revenues through the squeeze

AD Ports’ operations beat regional disruptions: ADX-listed giant AD Ports saw its net income rise 41% y-o-y to AED 653 mn in 1Q 2026, driven by operating leverage, lower finance costs, and stronger contributions from JVs and associates, according to its financial release (pdf). The group’s revenue rose 25% y-o-y to AED 5.8 bn during the period, supported by robust growth across both its maritime & shipping and economic cities & freezones clusters.

By segment: The maritime and shipping cluster drove the growth this quarter — with container feeder volumes up 20% y-o-y to 871k TEUs, while the bulk, multipurpose, and Ro-Ro fleet expanded to 63 vessels from 41 a year earlier. Meanwhile, economic cities and freezones recorded 843k sqm of new industrial land leases across Kezad, alongside AED 1.1 bn in asset monetization.

On the other hand, the ports cluster performance was mixed, with UAE container throughput declining 5% y-o-y and general cargo volumes falling 23% y-o-y. The decline was partly offset by stronger international activity, where container volumes grew 17% and general cargo volumes rose 21%.

How the system adapted: AD Ports kept services running by rerouting cargo and feeder operations through Fujairah Terminals and Khorfakkan Port while activating an integrated network of land, rail, and air bridges across the UAE. The group also mobilized around 800 trucks and four daily Etihad Rail freight services through bonded corridors as it moved to expand essential-goods warehousing capacity to 188k sqm from more than 76k sqm.

Trukker secures USD 300 mn lifeline

Trukker locks in USD 300 mn cross-border funding with ADCB

Saudi-based digital freight network platform Trukker secured a USD 300 mn cross-border securitization facility, with Abu Dhabi Commercial Bank (ADCB) acting as sole arranger and lender, according to a press release. Trukker will use the financing for working capital to support the company’s operations and expansion plans, including scaling its digital freight network and optimizing its carrier ecosystem across regional markets.

Not your typical bank loan: The non-recourse facility is backed by Trukker’s trade receivables across multiple markets and is structured across the UAE, Saudi Arabia, and Turkey, making it one of the region’s first multi-jurisdictional, asset-backed securitizations. The structure effectively converts future customer payments into tradable financing backed by institutional capital, rather than a conventional loan.

Why it matters: The financing reflects growing bank appetite for exposure to large, revenue-generating digital platforms operating across multiple MENA markets. It also signals a broader shift toward structured credit tied to operating performance — with companies like Trukker increasingly turning to structured, receivables-backed securitization instead of relying solely on equity funding. Over time, this could provide an alternative funding route for scaled startups with predictable cashflows and cross-border operations.

ADVISORS- White & Case and Paul Hastings provided counsel, while HSBC acted as facility security trustee and account bank across the different jurisdictions.

EU-backed loan expands Aqaba data center

Aqaba’s data center buildout gets EU-backed loan: Aqaba Digital Hub (ADH) secured a JOD 10 mn loan from the EBRD — backed by EU financial backing — to expand Jordan’s largest Tier 3 carrier-neutral data center. The financing will fund ADH’s existing facility, settle supplier commitments, and support construction of a second data hall.

The connectivity play: ADH already operates Jordan’s largest 6 MW data center footprint, with the hub anchored by AqabaIX — a neutral internet exchange point linking local telcos, internet service providers, and digital players.

Calendar

MAY

19-21 May (Tuesday-Thursday): Ground Handling Conference (IGHC), Cairo, Egypt.

19-21 May (Tuesday-Thursday): Terminal Operations Conference & Exhibition, Hamburg, Germany.

JUNE

2-4 June (Tuesday-Thursday): ProPak Mena, Cairo, Egypt.

4-5 June (Thursday-Friday): Supply Chain and Logistics Summit, Amsterdam, Netherlands.

6-8 June (Saturday-Monday): IATA World Air Transport Summit, Rio de Janeiro, Brazil.

10-11 June (Wednesday-Thursday): Black Sea Ports and Logistics, Istanbul, Turkey.

21-24 June (Sunday-Wednesday): Saudi Smart Logistics, Riyadh, Saudi Arabia.

22-23 June (Monday-Tuesday): Decarbonizing Shipping Forum, Rotterdam, Netherlands.

AUGUST

30 August-1 September (Sunday-Tuesday): Air Cargo Middle East, Riyadh, Saudi Arabia.

30 August-1 September (Sunday-Tuesday): Saudi Warehouse and Logistics Expo, Riyadh, Saudi Arabia.

SEPTEMBER

16-17 September (Wednesday-Thursday): Saudi Maritime & Logistics Congress, Dammam, Saudi Arabia.

22-24 September (Tuesday-Thursday): Seamless Middle East, Dubai, UAE.

28-30 September (Monday-Wednesday): Transport Logistics Middle East, Riyadh, Saudi Arabia.

OCTOBER

12-14 October (Monday-Wednesday): The Airport Show, Dubai, UAE.

21-22 October (Wednesday-Thursday): Global Ports Forum, Singapore.

26-29 (Monday-Thursday): Air Cargo Forum, Miami, US.

27-29 October (Tuesday-Thursday): Routes World, Riyadh, Saudi Arabia.

NOVEMBER

2-5 November (Monday-Thursday): ADIPEC Maritime and Logistics Exhibition and Conference, Abu Dhabi, UAE.

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TODAY: Could the Gulf build an aviation supercarrier?