Airbus sales chief defiant on A330neo demand as Boeing seals new win

The A330neo is a derivative of Airbus’s most-sold wide-body jet, the A330 series, whose fortunes are widely monitored by investors as one of its two main sources of profits and cash. (Reuters)
Updated 04 June 2018

Airbus sales chief defiant on A330neo demand as Boeing seals new win

  • The A330neo is a derivative of Airbus’s most-sold wide-body jet, the A330 series, whose fortunes are widely monitored by investors as one of its two main sources of profits and cash
  • Industry watchers say the European firm has 16 unfilled production slots for A330s in 2019, raising the prospect of further output cuts if it does not win new sales

SYDNEY: The head of airplane sales at Airbus dismissed concerns about a sharp drop in orders for the A330neo jet and predicted European wide-body demand would start to recover this year as rival Boeing extended a series of wins in the lucrative segment.
“The world is still full of opportunities in terms of wide-bodies. We have a lost a couple of campaigns in the West and there are other campaigns around the world. I am not personally in a panicking mode about the A330neo,” Chief Commercial Officer Eric Schulz told Reuters on Monday.
Speaking on the sidelines of an airlines meeting in Sydney, Schulz declined to give a numerical sales target for 2018 wide-body orders but said, “We will see, I think we will be ok. I can see from the dynamics in the market and what we have in the pipeline and what we have already negotiated.”
The A330neo is a derivative of Airbus’s most-sold wide-body jet, the A330 series, whose fortunes are widely monitored by investors as one of its two main sources of profits and cash.
Airbus has lost a series of US contests for sales of the 250-300-seat A330neo, followed by a decision set to be approved this week by the owners of India’s Vistara to order six Boeing 787s instead of A330neos, two industry sources said. The same airline may expand a leased fleet of A320neos.
Airbus and Boeing declined to comment and Vistara did not respond to a request to comment on the order, reported earlier by Bloomberg News.
Demand for wide-body jets has weakened recently because of oversupply, but Boeing has extended a traditional lead in that part of the market thanks to a spate of orders for its 787 and a rebound in 777 demand, assisted by a recovery in freight demand.
Airbus typically sells 4 in 10 big jets but reaped just 16 percent of wide-body orders between January and April. Adjusted for cancelations, net orders slumped into negative territory.
Analysts say a US decision to revoke export licenses for jets sold to Iran, after pulling out of an international nuclear sanctions deal, could deepen Airbus’s wide-body woes since IranAir’s order for 100 jets had included 28 A330neos.
Schulz said Airbus would not immediately reflect the collapse of the Iran deal in its order book as it uses a grace period for US licenses to “study the political situation.”
Still, industry watchers say the European firm has 16 unfilled production slots for A330s in 2019, raising the prospect of further output cuts if it does not win new sales.
Airbus hopes China could be a promising market.
Schulz said one factor weighing on A330neo sales was the relatively young age of many of the previous A330 models in service, meaning some operators were not yet ready to upgrade.
“I believe that especially for people who are operating the A330, the A330neo is a nice and easy transition toward an aircraft that generates very good efficiency,” he said.
The International Air Transport Association (IATA) said on Monday higher fuel prices were supporting new aircraft demand and that the average size of aircraft was rising. Schulz said on the sidelines of IATA’s annual meeting that wide-body jet demand would soon recover to reflect the underlying fundamentals.
“The market is not that fast but I can sense talking to the airlines that within the next 18 months to 2 years we will have much more dynamism in the market,” he said.


Middle East share of India’s oil imports falls to 4-year-low

Updated 19 min 12 sec ago

Middle East share of India’s oil imports falls to 4-year-low

  • Oil minister says India is working to diversify its oil supply sources

NEW DELHI: Indian imports of Middle Eastern oil plunged to a four-year low in 2019, tanker data shows, as the energy-hungry nation diversifies its supplies to cut costs and shield itself from geopolitical tensions.

India, the world’s third-biggest oil consumer, imports about 84 percent of its oil needs and traditionally relies on the Middle East for the majority of its supplies. However, the region’s share of India’s crude shrank to 60 percent last year — down from 65 percent a year ago and the lowest since 2015 — as record output from the US and elsewhere offered opportunities for importers to tap other sources.

India shipped in 2.68 million barrels per day (bpd) oil from the Middle East in 2019, down about 10 percent from 2018, and around 1.8 million bpd from elsewhere, the data reviewed by Reuters showed.

Deeper than expected oil output cuts by OPEC and allies, shouldered by Saudi Arabia, and less supply from Iran due to US sanctions also dented India’s intake of Middle Eastern oil, said Ehsan Ul Haq, analyst with Refinitiv.

Last year, sanctions and output cuts by OPEC and its allies, known as OPEC+, reduced the group’s supplies by 1.9 million bpd from 2018, while non-OPEC supply rose by 2 million bpd, the International Energy Agency said in its latest report. The IEA forecast that producers outside the OPEC+ pact would increase supplies by 2.1 million bpd in 2020.

India is working to diversify its oil supply sources to cut dependence on the Middle East, Oil Minister Dharmendra Pradhan said last week.

The drive to expand crude sources also reflects a push by Prime Minister Narendra Modi to bolster ties with countries such as Russia and the US.

India’s overall oil imports in 2019 fell by about 2.1 percent to 4.48 million bpd, the data showed, because most refiners temporarily shut processing units for upgrades ahead of new fuel standards in 2020. India is migrating to Euro VI compliant fuel from April 1.

Imports from CIS (former Soviet Union) nations rose in 2019 by about 65 percent to 171,000 bpd, the data showed. Intake of African grades rose by 7.3 percent to about 713,000 bpd, while US supplies was up by about 63 percent to 181,000 bpd. US oil accounted for about 4 percent of India’s overall imports in 2019, up from just 2.5 percent a year earlier.

Demand for heavy Middle Eastern grades was also affected by a shift in bunker fuel specifications from January, following new rules promoting lower sulfur fuels.

“Most Middle Eastern grades yield high sulfur fuel oil (HSFO) and because of new marine fuel norms, refiners are buying more from other producers to cut production of HSFO and increase output of very low sulfur fuel oil,” Haq said.