Boeing and Airbus speed up output to meet rising demand

A winglet of an Airbus A350-1000 XWB aircraft, seen at the Singapore Airshow. Airbus is increasing production of its narrowbody aircraft to 60 per month by mid-2019. (Reuters)
Updated 06 February 2018
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Boeing and Airbus speed up output to meet rising demand

SINGAPORE: The world’s largest aircraft manufacturers signaled a possible increase in output of their most popular passenger jets on Tuesday, highlighting their confidence about growth in demand for air travel.
Although new orders have dwindled following a seven-year boom, executives at the Singapore Airshow suggested Airbus and Boeing have enough business in their bulging order books to speed up their already-record production of narrowbody jets.
“The success of the product is forcing us to look at any opportunities we have to improve the rate. We have not come to any conclusion yet but this is something we are looking at very closely,” Airbus sales chief Eric Schulz told a news conference.
Schulz, making his first appearance since being recruited from Rolls-Royce to replace retired sales chief John Leahy, shrugged off concerns about the ability of the supply chain to keep up with higher production rates.
“I think the supply chain will be able to cope and we will be able to raise rates as needed in the market,” he said.
His comments match confidence from rival Boeing as the industry responds to growing demand for medium-haul jets.
In an interview with Reuters, a senior Boeing official said the US company was confident in demand for its 737 MAX jet, the latest version of which was rolled out on Monday.
“There is upward pressure (on production rates) because we are oversold,” Marketing Vice President Randy Tinseth said.
“If you want a (737) MAX today, we are talking 2023,” he said, refering to long waiting times for new jets.
Just as airlines overbook seats, aircraft manufacturers typically sell more aircraft than they plan to produce to protect themselves from airlines going bankrupt or failing to take delivery.
These comments show both manufacturers are confident they can preserve an adequate buffer, even with higher output.
Engine maker CFM International, which supplies both Boeing and Airbus, said last month that manufacturers had begun asking about its ability to support higher production.
Boeing currently produces 47 of its 737 narrowbody aircraft per month and is heading toward 57 per month next year.
Airbus is increasing production to 60 per month by mid-2019.
Industry sources have said both companies are looking at increasing production to as much as 70 single-aisle jets a month.
But the head of the world’s largest aircraft leasing company is yet to be convinced that markets can support such levels.
“Can both of them go to 70? I don’t think so. 140 a month, I don’t think that is possible at the moment,” AerCap CEO Aengus Kelly told Reuters when asked whether the market could support such levels of production.
Even so, he expected Airbus and Boeing, which make up the bulk of the $140 billion a year jet market, to exercise restraint.
“If the market can take it, they will give it. If the market won’t take it, they won’t,” he said.
“What is much more important for the manufacturers is not what they say they do, and not what the orders are but what they are delivering,” Kelly said. “If you look back over the past 20 years what you see is a very strong correlation between traffic growth and deliveries,” he said.


Jubail petrochemical complex could lead to homegrown car industry

Updated 27 June 2019
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Jubail petrochemical complex could lead to homegrown car industry

  • Advanced Petrochemical said it signed a memorandum of understanding with SK Gas to build a propane dehydrogenation and polypropylene complex
  • The project is expected to produce high value plastics grades for the automotive industry as well as other specialized grades that are currently being imported into Saudi Arabia

LONDON: Advanced Petrochemical and South Korean SK Gas plan to develop a $1.8bn petrochemical complex in Jubail that could help plans to develop a homegrown car industry in Saudi Arabia.
It comes amid increased economic cooperation between Riyadh and Seoul following an $8.3 billion economic co-operation pact struck this week during the first visit of Saudi Crown Prince Mohammed bin Salman to South Korea.
The Saudi petchem producer said it signed a memorandum of understanding with SK Gas to build a propane dehydrogenation and polypropylene complex. The project is expected to produce “high value plastics grades for the automotive industry” as well as other specialized grades that are currently being imported into Saudi Arabia, Advanced Petrochemical said in a filing to the Tadawul stock exchange on Wednesday.

 

Separately the company said it has received propane feedstock allocation from the Kingdom’s Ministry of Energy, Industry and Mineral Resources for the project, which is slated to start in 2024.
Advanced Petrochemical also disclosed in a third filing that it was conducting a feasibility study for a cracker project in the Kingdom.
These latest deals reflect twin objectives to develop high-value manufacturing in the Kingdom to create jobs while also investing heavily in the petrochemicals sector to capitalize on rising global demand for high value plastics.
Saudi Arabia is the largest new automotive sales and auto parts market in the Middle East, accounting for an estimated 40 percent of all vehicles sold in the region, according to the US export.gov website.The addition of potentially as many as 3 million women drivers to the roads is expected to further spur domestic demand.
Saudi companies, spearheaded by Saudi Aramco, are investing billions of dollars in petrochemical projects worldwide to meet rising global demand. Petrochemicals are set to account for more than a third of the growth in world oil demand to 2030, and nearly half the growth to 2050, adding nearly 7 million barrels of oil a day by then, according to the International Energy Agency (IEA).
Demand for plastics — the key driver for the petchem industry — has outpaced all other bulk materials (such as steel, aluminum, or cement), nearly doubling since 2000, the IEA estimates.

FACTOID

40% - Saudi Arabia is the largest new automotive sales and auto parts market in the Middle East, accounting for an estimated 40 percent of all vehicles sold in the region.