A global engine shortage is slowing jet deliveries to Gulf airlines

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WHAT WE’RE TRACKING TODAY

TODAY: Engine crunch holds back Gulf airline growth + EGA is routing more aluminium exports away from Hormuz

Good morning, nice people — the new month opens with the region doing what it does best: adapting.

Our big story today dives into how Gulf airlines have hundreds of new jets on order, yet an engine shortage is slowing how fast they arrive. Manufacturers have ramped up production, but demand is still outrunning them.

Emirates Global Aluminium (EGA), meanwhile, is moving more of its exports clear of Hormuz entirely. A new agreement with Gulftainer lets EGA ship up to 250k tons of aluminium through the UAE's east coast in year one, rising to 300k in year two — with Gulftainer expanding port capacity to keep pace if volumes keep climbing.

Plus: The biggest Hormuz bypass of all might belong to Abu Dhabi's own sovereign fund. L'imad Holding is set to become the main vehicle for routing the emirate's trade around the strait, likely spending tens of bns of USD on new port infrastructure focused on Fujairah. Abu Dhabi's calling it “Zero Hormuz.”

We’re honored to welcome Ahmed M. Sobhy as a guest speaker at the 2026 EnterpriseAM Egypt Forum.

Ahmed Sobhy currently serves as deputy CEO at E-Finance for Financial and Digital Investments (EFIG), overseeing the investment and finance divisions with a focus on the company’s growth and expansion into new business areas.

Prior to this role, Sobhy served as chief investment officer at Banque Misr, leading the bank’s equities and capital markets investments, including a private equity portfolio valued at USD 3 bn, and playing a pivotal role in the bank's transformation and fintech expansion over nearly six years. Before that, he was Investment Principal at Ezdehar Fund Management, where he led several acquisition and exit transactions, including the strategic minority stake in Dsquares.

Earlier in his career, Sobhy was vice president in the investment banking division at Morgan Stanley & Co., leading M&A transactions exceeding USD 31 bn across the UK, US, and Egypt, and held roles at Swicorp across the MENA region.

Registration is now closed. Thank you to everyone who registered. We look forward to welcoming you on Monday, 5 October.

Zero Hormuz, full wallet

Abu Dhabi's newest wealth fund is set to become the main vehicle for routing the emirate’s trade around Hormuz. L’imad Holding is likely to spend tens of bns of USD on new port infrastructure outside the strait, focused on Fujairah on the Gulf of Oman, Bloomberg reports, citing people it says are familiar with the matter. The emirate calls the strategy “Zero Hormuz.” L’imad has already moved to take AD Ports private, saying the group’s next phase would be “complex, capital-intensive and long-term.”

Abu Dhabi has also been looking outward for third-party capital, with the sources saying the emirate doesn’t want to foot the bill for the expansion on its own. That’s why the USD 30 bn infrastructure partnership with BlackRock’s GIP, Temasek, and Adnoc matters, and why L’imad Capital is preparing to raise third-party money as early as next year, as we reported yesterday.

Room with a view?

Oman is turning Duqm into the Gulf's biggest crude parking lot outside Hormuz. OQ plans to double its onshore oil storage at the Arabian Sea port to 10 mn barrels within three years, CEO Ashraf Al Mamari tells Bloomberg. OQ is also weighing two VLCCs that could add another 4 mn barrels of floating storage. The vessels can be converted within about six months, and a decision is expected later this year. Longer term, OQ is targeting c. 40 mn barrels of onshore capacity at Duqm.

Iraq has already claimed a spot: OQ subsidiaries agreed last year with Iraq’s Somo to develop an initial 10 mn barrel crude storage project at Ras Markaz in Duqm, explicitly pitched as a way to keep Iraqi barrels outside Hormuz and closer to international shipping lanes.

BACKGROUND- Duqm’s pitch as a Hormuz bypass goes back decades. A cross-peninsula pipeline carrying Saudi crude directly to the Arabian Sea, with Duqm pitched as the endpoint, has been floated on and off since the 1970s and never built — though it's already got a live energy link with Kuwait: OQ and Kuwait Petroleum International jointly own the Duqm refinery.

Flydubai issues statement on diverted Tel Aviv flight

A flydubai flight from Dubai to Tel Aviv made an emergency landing in Saudi Arabia yesterday after an “altercation” on the plane’s flight deck, a spokesperson said in a statement. Flight FZ1073, a Boeing 737, diverted to Tabuk after transmitting a 7500 transponder code, which signals “unlawful interference,” according to Flightradar24 data cited by Gulf News. The airline confirmed that on-duty crew aboard the flight secured the aircraft before landing safely in Tabuk.

What we know: All passengers and crew are safe and accounted for, with two replacement aircraft sent to relieve them, and the incident hasn’t affected other scheduled flydubai operations. “At this early stage, the underlying reasons and motives behind this event are unknown and remain subject to a formal investigation. We urge all parties to refrain from premature speculation while authorities gather the facts,” the airline said.

The Gulf’s sovereign funds and largest companies are committing billions to AI infrastructure at home and to AI companies in the US and beyond. EnterpriseAM AI + Innovation reports on where that capital goes, who controls it and what it is actually buying.

Every Tuesday and Thursday, we also cover the startups and established firms across MENA putting AI to work, and how it is changing jobs, education and the way business runs.

It’s sharp, analytical and skeptical journalism that ignores hype and is laser-focused on informing our readers, not pleasing our sources.

The newsletter launches Monday, 5 October, at the EnterpriseAM Egypt Forum's AI edition.

Sign up here to be among the first to get it straight to your inbox.

Market watch

Oil prices fell 1% this morning as Gulf exports and US inventories eased supply fears, while US-Iran talks resumed, Reuters reports. Brent crude futures dipped 1.1% to USD 96.92 / bbl by 04.20 GMT, while West Texas Intermediate (WTI) eased 1.4% to USD 89.18 / bbl.

The Baltic Index continues its losing streak: The Baltic Exchange’s dry bulk index — which tracks rates for the capesize, panamax, and supramax vessel segments — fell 2.8% to 3,178 points on Tuesday. The capesize index dipped 4.6% to 5,103 points, while the panamax dipped 0.5% to 2,390 points. The smaller supramax inched up 0.4% to 1,797 points.

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Delayed engines are forcing Gulf airlines to rework routes and pay more to maintain older fleets

Gulf’s airlines have hundreds of new jets on order, and a shortage of engines is slowing how fast they can arrive. Engine manufacturers have stepped up production, but demand is still running ahead of them, and Boeing customers are feeling it most. Until the new jets arrive, the region’s carriers are paying to keep older aircraft flying longer.

Why it matters: A late jet means a late route. When deliveries slip, airlines have to delay launches, cut frequencies, or lease in capacity to cover the gap. Every extra year an older jet stays in service also sends more work to engine shops that are already stretched.

What sits under the wing decides who waits

On narrowbodies, nearly every Gulf order runs through engine manufacturer CFM. The LEAP-1B is the only engine available for the 737 Max. Air Arabia ordered 240 LEAP-1As for its 120 A320neo-family jets, Riyadh Air picked 120 LEAP-1As for 60 A321neos, and flydubai has a services agreement covering 222 LEAP-1Bs on 111 Max aircraft.

In terms of numbers, CFM’s are moving in the right direction: LEAP deliveries rose 41% in 1H 2026, and CFM has shipped more than 500 engines in each of the past four quarters. It still has to ramp fast enough to keep up with Airbus and especially Boeing, Wouter Dewulf, professor of air transport management and economics at the University of Antwerp, tells EnterpriseAM. The link is tightest on Max, he adds, because there’s no second engine to fall back on.

Widebody buyers carry their own exposure through the 787: Boeing says engine shortages are slowing its planned increase in Dreamliner production. That puts carriers with large 787 orders potentially exposed, among them Riyadh Air, Saudia, Etihad, and Qatar Airways, Sindy Foster, principal managing partner at Avaero Capital Partners, tells EnterpriseAM. Boeing hasn't publicly tied any specific delivery to those airlines to an engine delay, she adds.

Meanwhile, Pratt & Whitney's squeeze comes from the jets it has already delivered: Alongside new geared turbofan (GTF) engines for Airbus and Embraer, it has to support a heavy aftermarket of shop visits, spare engines, and power-metal inspections. So some of the engines and parts it builds go to keeping current aircraft flying instead of onto new ones, Dewulf says.

More engines would help, though the Gulf also needs engines that hold up. Higher CFM output and a lighter GTF maintenance load would help Gulf carriers as much as anyone. Heat and harsh operating conditions put extra strain on engines in the region, making durability, time on wing and maintenance support as important as delivery numbers, Bryan Terry, managing director at Alton Aviation Consultancy, tells EnterpriseAM.

Engines also share the blame with other bottlenecks: Boeing is struggling to hold 737 Max production steady at 47 a month, largely because of wing production, and premium-seat certification is holding back the 787 alongside engines. The bigger problem is how these constrained supply chains now feed into one another, with none of them dominating, Dewulf says.

Delays hit the route map first, then the repair bill

Two Gulf carriers have already had to adjust. Flydubai has said repeated Boeing delays forced it to revisit routes and frequencies, and it has wet-leased aircraft to fill the gap. Riyadh Air's first Dreamliner delay pushed back its launch. When six aircraft then arrived within c. 30 days, the airline had to fit its planned fleet build-up into a much shorter window, Foster says. Etihad has had a smoother run, with strong delivery growth recently and no current engine-related delay, she adds.

Airlines have a standard playbook for this: They push back launches, new routes, or added frequencies, move aircraft over from other routes, fly existing jets longer, or pick up used aircraft from lessors and other airlines, Terry says. Delivery delays have become routine for the industry in recent years, he adds.

The playbook gets harder to run the longer a delay lasts: Six months is usually manageable. A year-long slip across many aircraft can force a broader rethink, because the airline may have hired pilots, secured slots, and marketed routes around jets that haven’t shown up.

Keeping older jets flying also means more time in the shop: Longer service lives bring more engine shop visits at repair facilities that are already short on capacity. Abu Dhabi's Sanad is expanding to take on more of that work: its expanded Rolls-Royce agreement in February covers up to 612 Trent 700 shop visits through 2031, backed by AED 125 mn of planned spending on equipment, systems, automation, and hiring.

Money buys the flagships time, but only so much

Emirates and Etihad are spending heavily to stretch the life of the jets they already have. Emirates is spending nearly USD 5 bn retrofitting its A380 and 777 fleets, as delayed deliveries force it to keep them in service longer. President Tim Clark has described the strategy as the airline taking control of its own destiny. Etihad is buying aircraft on the secondary market, bringing A380s back into service, stockpiling parts locally, and running a USD 1 bn retrofit program.

That kind of spending comes easier with a big balance sheet behind it. Carriers in the UAE, Qatar, and Saudi Arabia have bigger fleets, more purchasing power, and stronger sovereign backing. That leaves them less exposed to supply-chain shocks than smaller states and low-cost carriers in the region, Terry argues.

Scale has a downside, though, since bigger orderbooks leave bigger gaps when deliveries slip. Large Gulf carriers generally have better access to financing, lessors, and wet-lease Aircraft, Crew, Maintenance, and Ins. (ACMI) capacity, and the scale of their orders gives them bargaining power with manufacturers. “But money cannot create an engine or a delivery slot when the entire industry is short of capacity,” Dewulf says. An airline expecting dozens of aircraft a year has a much harder time absorbing repeated delays than one missing a single jet from a small orderbook, he adds.

Airlines are starting to buy engine support along with the jet

All of this is changing what airlines ask for when they place orders. Engine availability, spare-engine commitments, maintenance capacity, and overhaul turnaround now sit alongside fuel burn and price when airlines weigh a purchase, Foster argues.

Some carriers are also spreading the risk across both airframers. Flydubai and Etihad have each ordered from Airbus and Boeing, though neither has said that engine shortages alone drove that choice. On the A320neo family, which has two engine options, “the supplier's ability to support both deliveries and the in-service fleet could influence future selections,” Foster says.

EGA moves more aluminium exports to the UAE's east coast under a new Gulftainer agreement to bypass Hormuz

Emirates Global Aluminium (EGA) is shifting more of its exports to the UAE's east coast, clear of Hormuz. A new agreement with Gulftainer lets EGA ship up to 250k tons of aluminium in the first year and as much as 300k tons in the second, the company said in a statement. Volumes could grow after that, with Gulftainer expanding port capacity to keep pace.

Why this matters: Alternative routes hedge the shipping risk only, not the production side. EGA previously said that restoring pre-incident shipment levels still depends on the strait’s reopening, while developing other corridors would reduce its reliance over time.

Other UAE exporters are heading east too: AD Ports and Borouge agreed in May to explore an alternative petrochemicals export hub on the UAE’s east coast. In July, Gulftainer announced a USD 2 bn investment across Khor Fakkan and its inland network. The company could absorb up to 90% of the UAE's container demand if the strait is blocked again, Gulftainer CEO Farid Belbouab said at the time.

BACKGROUND- The agreement caps months of workarounds for EGA. The company halted outbound UAE shipments in March after Iranian strikes knocked out production at its Al Taweelah smelter. The company then planned to truck aluminum to Sohar for export and bring alumina feedstock back the same route. EGA’s aluminum sales fell 32% in 1H to 939k tons amid production disruption and logistics constraints, with the firm having since found alternative routes. The smelter is a quarter of the way back: EGA has restarted 315 of Al Taweelah’s c.1.3k reduction cells as of late August, up from 89 in early July, and is targeting full production in 1Q 2027. Its alumina refinery is running at about half capacity.

Syria begins work on the Arab Gas Pipeline stretch that would connect Jordan's border to Turkey's

Syria has started building the stretch of the Arab Gas Pipeline that would link the Jordanian border to the Turkish one. The Syrian Petroleum Company is laying an 186 km, 36-inch section that will help complete a c. 566 km run between the two borders, QNA reports. The section comes with c. 8 mn cbm of operational gas storage and a compressor station that can move 11 mn cbm/d at first, expandable to c. 22 mn cbm/d.

Demand on the line is already growing: Jordan recently approved plans to move imported gas from Aqaba through the Arab Gas Pipeline via Syria to Lebanon for power generation. Egypt has also been sending c. 50 mmcf/d to each of Syria and Lebanon this year, using LNG regasified at Aqaba. The new section gives those flows more room and more flexibility as they grow.

The Gulf tanker crunch is turning ship pricing upside down

A 10-year-old supertanker is supposed to cost less than a new one — but not when buyers need ships now. Several very large crude carriers (VLCCs) built before 2016 have changed hands for at least USD 150 mn over the past week, above the c. 135 mn average price of a newly built vessel, the Financial Times reports.

Buyers are paying for time, not age. Vessel purchases that previously took weeks to negotiate are closing in days, because every week without a ship means missing out on record-high freight earnings. Middle East-to-Asia VLCC rates have climbed as high as USD 1.2 mn a day, meaning a vessel that can enter service immediately is a different asset from one a shipyard will deliver years from now.

Owners, meanwhile, are in no hurry to sell. Tanker values are up by a third compared to last year, and many shipowners are holding on to bank on record rates, thinning the pool of ships for sale and pushing prices higher still, brokers and owners told the FT. Those that do sell are timing the handover — like Oman’s Asyad Shipping, which is selling two 2011-built VLCCs but will keep operating them until as late as January 2027.

The price surge starts with a simple problem: moving the same barrel now often takes two ships instead of one. Gulf producers have increasingly relied on shuttle tankers to move crude through Hormuz before transferring it off Oman to another VLCC for the long-haul trip to Asia. Crude transits through Hormuz, including ship-to-ship activity in the Gulf of Oman, averaged c. 9 mn bbl / d over the seven days to 22 September, up from 2.2 mn bbl / d in late July.

For Gulf producers, buying the ship is another way of securing control over the export route. National oil companies have traditionally chartered the tonnage they need. That model gets more complicated when vessel owners demand elevated rates — or simply refuse to enter the Gulf altogether.

The UAE’s Adnoc was heading this way before the latest buying frenzy. Adnoc L&S agreed in August to buy six secondhand VLCCs and five very large gas carriers for c. USD 1.3 bn, weeks after it spent c. USD 590 mn on five VLCCs from Frontline, as Hormuz and Red Sea disruptions pushed it to charter around 15 crude tankers for shuttle runs and customer deliveries. Their rationale seems to be bringing more capacity in-house rather than relying on export infrastructure that sits in somebody else’s hands when the charter market tightens. Kuwait’s state oil company and buyers moving Iraqi crude are also among those hunting for tonnage, the FT reports.

Folk Maritime is waiting instead of buying: The PIF-owned carrier Folk Maritime did the opposite and decided to wait for newbuild and secondhand vessel prices to stabilize before adding more ships, CEO Poul Hestbaek told Asharq Business. The pause doesn’t change its plan to roughly double its six-vessel fleet over the next four years, as it targets a 15-20% share of regional trade linking the Red Sea, Gulf, Indian Ocean, Southeast Asia, and East Africa.

Producers are bidding against buyers who got into the trade early. South Korean manufacturer Sinokor built up a huge tanker position before prices reached current levels and is now one of the main operators feeding the Gulf’s ship-to-ship network, fixing vessels at elevated rates after buying dozens of ships earlier this year. Traders are moving the same way: Trafigura has launched a 14-ship VLCC venture, Volare Shipping, as commodity houses try to secure transport capacity instead of leaving freight costs to the spot market.

The outlook: Shipowners warn of a crash if a peace agreement reopens the Strait of Hormuz, and it would land as new supply arrives: the VLCC orderbook now equals 38% of the fleet on the water, up from 15% a year ago, according to Veson Nautical. Even so, freight rates would stay structurally higher than in previous years, Watson Farley & Williams’ George Macheras told the news outlet.

Calendar

OCTOBER

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

20-22 October (Tuesday-Thursday): TOC Americas, Cartagena, Colombia.

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.

10-11 November (Tuesday-Wednesday): TOC Asia, Singapore.

10-12 November (Tuesday-Thursday): Intermodal Europe, Rotterdam, Netherlands.

11-13 November (Wednesday-Friday): Logitrans, Istanbul, Turkey.

18-19 November (Wednesday-Thursday): Breakbulk Asia, Singapore.

FEBRUARY 2027

10-12 February (Wednesday-Friday): Routes Americas, San Juan, Puerto Rico.

MARCH 2027

16-18 March (Tuesday-Thursday): CMA Shipping, Houston, US.

16-18 March (Tuesday-Thursday): Routes Asia, New Delhi, India.

APRIL 2027

20-22 April (Tuesday-Thursday): Routes Europe, Antalya, Turkey.

26-29 April (Monday-Thursday): Transport Logistic and air cargo Europe, Munich, Germany.

26-29 April (Monday-Thursday): Saudi Smart Logistics, Riyadh, Saudi Arabia.

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