Airbus cuts A330 output, first-quarter profit capped by engine delays

People celebrate near an Airbus A330neo aircraft after its maiden flight event in Colomiers near Toulouse, France on October 19, 2017. (Reuters)
Updated 27 April 2018
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Airbus cuts A330 output, first-quarter profit capped by engine delays

  • Europe’s largest aerospace group said it was reducing deliveries of the 250-300-seater A330 aircraft to around 50 in 2019
  • Analysts were on average expecting a €23.9 million operating loss on revenues of €10.209 billion

PARIS: Airbus bowed to weak demand for its A330 passenger jet on Friday, announcing a cut in production for 2019 after a series of bruising defeats to Boeing in contests for wide-body jets.
Europe’s largest aerospace group said it was reducing deliveries of the 250-300-seater to around 50 aircraft in 2019, without giving a figure for its previous plans.
Airbus delivered 67 of the jets in 2017, implying a cut of as much as 25 percent in output based on steady volumes this year — though some analysts see production starting to dip as early as this year as orders dry up.
The production came as Airbus posted a slender — though better than expected — core profit in the first quarter after delays in engine deliveries for its smaller A320neo.
Together the A320 and A330 families, which feature updated versions of its most successful airframes, generate most of the cash and income needed to support future developments and other activities within the maker of airplanes, rockets and fighters.
While the narrowbody A320neo remains a best-seller, with Airbus recently unable to produce the jets fast enough due to engine supply problems, the upgraded A330neo has been losing ground to the newer Boeing 787 at carriers like American Airlines and Hawaiian Airlines.
“We knew (the first quarter) was going to be grisly – and it is,” said Jefferies analyst Sandy Morris in a note.
“The A330 going down to 50 (a year) is overtly bad news, but we have suspected for some time the A330’s slow sales could mean A350 production moves up at some point,” he added.
Airbus reported an adjusted quarterly operating profit of €14 million, compared with a restated year-earlier loss of 19 million. Revenues fell 12 percent to €10.119 billion. Airbus reaffirmed financial forecasts, however.
Analysts were on average expecting a €23.9 million operating loss on revenues of €10.209 billion, according to a Reuters poll.
Airbus has said it expects deliveries to be once again heavily weighted toward the latter part of the year, as industrial problems felt by engine makers Pratt & Whitney and to a lesser extent CFM International start to ease.
The earnings statement did not refer to plans to increase A320neo output further than planned in 2019, to 63 aircraft a month from a previous target of 60, as disclosed earlier this week.
The head of French engine maker Safran, a partner in CFM alongside General Electric, expressed caution over the plans on Wednesday, saying it was too early to commit to higher output as suppliers work through what is already a record production ramp-up to meet air travel demand.


India antitrust watchdog issues advisories to DP World, Maersk units operating at Mumbai port

Updated 9 min 30 sec ago
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India antitrust watchdog issues advisories to DP World, Maersk units operating at Mumbai port

  • The Competition Commission of India last year ordered a probe into suspected antitrust violations by DP World and Maersk units
  • The antitrust dispute at the JNPT is based on so-called inter-terminal transfers

NEW DELHI: India’s antitrust watchdog has ordered Denmark’s A.P. Moller-Maersk and Dubai’s DP World to withdraw certain customer advisories which it said could hamper growth of the country’s largest container port in Mumbai, a document seen by Reuters showed.
The Competition Commission of India (CCI) last year ordered a probe into suspected antitrust violations by DP World and Maersk units at the terminals they operate at state-owned Jawaharlal Nehru Port Trust (JNPT).
Handling 66 million tons of cargo in the last fiscal year to March, JNPT is critical to India’s international trade. The port handles more than half of India’s traffic in shipping containers each year.
The probe was ordered as the CCI found merit in a complaint filed by Singapore’s PSA International, which alleged the rival duo had created barriers to hinder the growth of PSA’s terminal by colluding on certain charges they levy at the port.
Though the terminal operators handle each other’s containers to help boost the port’s efficiency, PSA had alleged that DP World and Maersk last year issued advisories aimed at discouraging port users from sending PSA’s containers to their terminals.
In an order issued by the CCI on Jan. 15, the watchdog ordered Maersk and DP World units to withdraw those advisories, saying it “smacks of anti-competitive” conduct.
The advisories, if not withdrawn, would cause “irretrievable damage or losses” not only to PSA, and would not augur well for the port’s development, according to the order. It has not been made public.
“This is likely to generate unwarranted uncertainty, chaos, discontent and anxiety among shipping lines and customers,” the CCI said.
The order is only an interim measure, and the wider probe continues.
A DP World spokesperson said the company had not received any such order from the Indian watchdog, but it was “committed to ensuring” it complies with all laws.
A.P. Moller-Maersk, the world’s biggest container shipping group, did not respond to queries. PSA, which is owned by Singapore government-owned investment fund Temasek Holdings, declined to comment.
The antitrust dispute at the JNPT is based on so-called inter-terminal transfers.
Under the system, freight trains arriving at JNPT typically carry containers destined for several terminals, but stop at just one that handles all the cargo on a given day. Other operators then collect their containers by truck for loading at their own terminals. A similar procedure is followed, in reverse, when imported containers are unloaded.
DP World’s advisory had said the inter-terminal operations with PSA were “inefficient and unviable.” Maersk had said its terminal “shall not be responsible” for handling containers to and from PSA-terminal bound trains.
Both the companies denied PSA’s allegations while arguing to the CCI that the advisories were based on “commercial justifications,” the order said.
Units of Maersk, DP World and PSA operate four of the JNPT port’s five terminals, with the fifth owned by the government. The PSA terminal, inaugurated in February, is planned to be the largest, expected to nearly double JNPT’s capacity.