Airbus turmoil overshadows bid to rescue Bombardier’s CSeries program

Above, an Airbus A320neo aircraft and a Bombardier CSeries aircraft are pictured during a news conference to announce a partnership between Airbus and Bombardier on the C Series aircraft program near Toulouse, France. (Reuters)
Updated 22 October 2017
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Airbus turmoil overshadows bid to rescue Bombardier’s CSeries program

PARIS: Airbus’s coup in buying a $6 billion Canadian jetliner project for a dollar stunned investors and took the spotlight off a growing ethics row last week, but internal disarray has raised questions over how smoothly it can implement the deal.
The European planemaker secured the deal for Bombardier’s CSeries program by pledging to throw its marketing might behind the loss-making jets, just as the Airbus sales machine reels from falling sales and internal and external corruption investigations.
Chief Executive Tom Enders has urged staff to keep calm in the face of French reports describing payments to intermediaries and growing concern over fallout from the investigations.
But the mood at the group’s Toulouse offices remains grim.
“Bombardier asked for an ambulance and Airbus sent a hearse,” said one person with close ties to the company.
French media attention on the growing scandal helped to camouflage talks to buy the CSeries. Rumors circulated in late August that Enders and a colleague were visiting Paris to meet investigators. In fact, they were holding the first of several secret dinner meetings with Bombardier.
But the same affair, which first came to light in 2016, has begun to cloud sales momentum. In the first nine months of the year Airbus accounted for only 35 percent of global jet sales in its head-to-head battle with US rival Boeing.
The Airbus sales operation is demoralized and in disarray, multiple aerospace and airline industry sources said, with some blaming Enders for turning the company against itself.
Two people said the situation is so tense that some employees have begun to shy away from selling in problematic countries, rather than risk being drawn into the investigation.
Soon-to-retire sales chief John Leahy has been asked to stay until the end of the year to help steady the operation, but his successor has not been officially confirmed, adding a sense of vacuum that has also sapped morale.
Leahy designated his deputy Kiran Rao as his successor earlier this year but the chaos engulfing Airbus means now is not considered the right time for major new announcements.
A spokesman for Airbus, which has long predicted a slower year after an order boom, dismissed reports of instability.
“We have a great sales team ... but it is fully understood that they cannot repeat records every year; and the year is not over,” he said.
Enders has strongly defended his decision in 2016 to report flawed paperwork to UK authorities, which prompted UK and French investigations focusing on a system of sales agents run by a separate Paris department that has since been disbanded.
Airbus says no evidence of corruption has been uncovered, but Enders has pledged to continue the overhaul of sales practices historically shared between Toulouse and Paris.
A source close to Bombardier acknowledged disruption at Airbus but predicted things would settle down by the time the deal for Airbus to sell the CSeries closes next year.
At that point Airbus will face a second challenge in marketing the CSeries, which for years it dismissed as a weak upstart. Now it must offer the aircraft side by side with the older A320.
Airbus plans to refresh the A320 further after adding new engines and this will bring it closer to the smaller CSeries in performance, two people close to the plans said. It may also make some CSeries features more compatible with its own A320s.
That comes on top of plans to enhance the larger A321neo in response to Boeing’s launch of a new mid-market plane, which industry sources expect to happen next year.


OPEC oil ministers gather to discuss production increase

Updated 19 June 2018
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OPEC oil ministers gather to discuss production increase

  • Analysts expect the group to discuss an increase in production of about 1 million barrels a day
  • The officials were arriving in Vienna ahead of the official meeting Friday

VIENNA: The oil ministers of the OPEC cartel were gathering Tuesday to discuss this week whether to increase production of crude and help limit a rise in global energy prices.
The officials were arriving in Vienna ahead of the official meeting Friday, when they will also confer with Russia, a non-OPEC country that since late 2016 has cooperated with the cartel to limit production.
Analysts expect the group to discuss an increase in production of about 1 million barrels a day, ending the output cut agreed on in 2016.
The cut has since then pushed up the price of crude oil by about 50 percent. The US benchmark in May hit its highest level in three and half years, at $72.35 a barrel.
Upon arriving, the energy minister of the United Arab Emirates, Suhail Al Mazrouei, said: “It’s going to be hopefully a good meeting. We look forward to having this gathering with OPEC and non-OPEC.”
The 14 countries in the Organization of the Petroleum Exporting Countries make more money with higher prices, but are mindful of the fact that more expensive crude can encourage a shift to renewable resources and hurt demand.
“Consumers as well as businesses will be hoping that this week’s OPEC meeting succeeds in keeping a lid on prices, and in so doing calling a halt to a period which has seen a steady rise in fuel costs,” said Michael Hewson, chief market analyst at CMC Markets UK
The rise in the cost of oil has been a key factor in driving up consumer price inflation in major economies like the US and Europe in recent months.
Already US President Donald Trump has called on OPEC to cut production, tweeting in April and again this month that “OPEC is at it again” by allowing oil prices to rise.
Within OPEC, an increase in output will not affect all countries equally. While Saudi Arabia, the cartel’s biggest producer, is seen to be open to a rise in production, other countries cannot afford to do so. Those include Iran and Venezuela, whose industries are stymied either by international sanctions or domestic turmoil. Iran is a fierce regional rival to Saudi Arabia, meaning the OPEC deal could also influence the geopolitics in the Middle East.