Airbus bags deal with Philippine budget carrier Cebu Air as sales flounder at Paris Air Show

Cebu Air, which operates the Cebu Pacific brand, had a 51 percent share of the Philippine domestic market in 2018. (AFP)
Updated 18 June 2019
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Airbus bags deal with Philippine budget carrier Cebu Air as sales flounder at Paris Air Show

  • Cebu Air’s order included 10 of Airbus’s new long-range A321XLR passenger aircraft
  • There is speculation that a decade-long boom in orders might be coming to an end

LE BOURGET: Airbus struck a $6 billion plane deal with Philippines budget airline Cebu Air on Tuesday, extending its lead on orders at a subdued Paris Airshow as rival Boeing struggles following the grounding of its top-selling jet.
Cebu’s order included 10 of Airbus’s new long-range A321XLR passenger aircraft, which was launched at the show on Monday, as well as 16 wide-body A330neos and five single-aisle A320neos.
Reuters reported on Monday that Cebu was poised to buy more than two dozen Airbus planes.
Sources familiar with the matter say American Airlines and leasing giant GECAS are also in talks to buy the A321XLR, which aims to carve out new routes for airlines with smaller planes and steal a march on Boeing’s plans for a potential all-new mid-market jet, the NMA.
Despite the flurry of activity around the A321XLR, however, dealmaking at the aerospace industry’s biggest annual event has been quieter than normal, fueling speculation that a decade-long boom in orders might be coming to an end.
With airlines struggling with over-capacity, slowing economies and geopolitical tensions, some analysts warn Airbus and Boeing could face a growing number of cancellations from their bulging order books.
Boeing in particular is suffering after the grounding of its MAX 737 aircraft in March following two deadly crashes.
However, the planemakers are confident of continued strong demand for more fuel-efficient planes as emissions regulations tighten and as air travel continues to rise, driven by Asia’s growing middle classes. Boeing on Monday increased its 20-year industry demand forecast.
“Although investors have started to ask questions about the state of the upcycle, the aerospace industry remains very confident in the current state of the market,” analysts at Vertical Research Partners said in a note.
Cebu Air Chief Financial Officer Andrew Huang told a news conference the 16 A330neo jets it was buying would have up to 460 seats, allowing the airline to add new international routes.
Cebu, which operates the Cebu Pacific brand, had a 51 percent share of the Philippine domestic market in 2018, according to company data. In the international market, its 19 percent share was second only to full-service rival Philippine Airlines with 28 percent.
After announcing no major aircraft orders on Monday, Boeing could unveil some on Tuesday, including a potential deal with Air Lease Corp. whose founder Steven Udvar-Hazy told reporters on Monday he would be “at Boeing tomorrow.”


‘Huge increase’ in crude prices not expected: IEA executive director

Updated 19 July 2019
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‘Huge increase’ in crude prices not expected: IEA executive director

  • The International Energy Agency is revising its 2019 global oil demand growth forecast down to 1.1 million barrels per day
  • IEA’s Fatih Birol: Serious political tensions could impact market dynamics

NEW DELHI: The International Energy Agency (IEA) doesn’t expect oil prices to rise significantly because demand is slowing and there is a glut in global crude markets, its executive director said on Friday.
“Prices are determined by the markets ... If we see the market today, we see that the demand is slowing down considerably,” said IEA’s Fatih Birol, in public comments made during a two-day energy conference in New Delhi.
The IEA is revising its 2019 global oil demand growth forecast down to 1.1 million barrels per day (bpd) and may cut it again if the global economy and especially China shows further weakness, Birol told Reuters in an interview on Thursday.
Last year, the IEA predicted that 2019 oil demand would grow by 1.5 million bpd. But in June this year it cut the growth forecast to 1.2 million bpd.
“Substantial amount of oil is coming from the United States, about 1.8 million barrels per day, plus oil from Iraq, Brazil and Libya,” Birol said.
Under normal circumstances, he said, he doesn’t expect a “huge increase” in crude oil prices. But Birol warned serious political tensions could yet impact market dynamics.
Crude oil prices rose nearly 2 percent on Friday after a US Navy ship destroyed an Iranian drone in the Strait of Hormuz, a major chokepoint for global crude flows.
Referring to India, Birol stressed the country could cut its imports, amid rising oil demand in the country, by increasing domestic local oil and gas production.
Prime Minister Narendra Modi had set a target in 2015 to cut India’s dependence on oil imports to two-thirds of consumption by 2022, and half by 2030. But rising demand and low domestic production have pushed imports to 84 percent of total needs in the last five years, government data shows.
Meanwhile, the IEA doesn’t expect a global push toward environmentally friendly electric vehicles can dent crude demand significantly, Birol said, as the main driver of crude demand globally has been petrochemicals, not cars.
He said the impact of a serious electric vehicle adoption push by the Indian government would not be felt immediately.