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.


Demand issues ‘to overshadow OPEC+ supply next year’

Updated 29 October 2020

Demand issues ‘to overshadow OPEC+ supply next year’

  • Libya's rising production adding to pressure on oil markets

DUBAI: The Organization of the Petroleum Exporting Countries (OPEC) and its allies will have to contend with a “lot of demand issues” before raising supply in January 2021, given throughput cuts by oil refiners, the head of Saudi Aramco’s trading arm said.
OPEC and its allies plan to raise production by 2 million barrels per day (bpd) from January after record output cuts this year as the coronavirus pandemic hammered demand, taking overall reductions to about 5.7 million bpd. 

“We see stress in refining margins and see a lot of refineries either cutting their refining capacity to 50-60% or a lot of refineries closing,” Ibrahim Al-Buainain said an interview with Gulf Intelligence released on Wednesday.

“I don’t think the (refining) business is sustainable at these rates (refining margins).”

However, Chinese oil demand is likely to remain solid through the fourth quarter and into 2021 as its economy grows while the rest of the world is in negative territory, he added.

Among the uncertainties facing the oil market are rising Libyan output on the supply side and a second wave of global COVID-19 infections, especially in Europe, on the demand side, Al-Buainain said.

Complicating efforts by other OPEC members and allies to curb output, Libyan production is expected to rebound to 1 million bpd in the coming weeks.

Oil prices, meanwhile, fell over 4 percent on Wednesday as surging coronavirus infections in the US and Europe are leading to renewed lockdowns, fanning fears that the unsteady economic recovery will deteriorate.

“Crude oil is under pressure from the increase in COVID-19 cases, especially in Europe,” said Robert Yawger, director of energy futures at Mizuho in New York.

Brent futures fell $1.91, or 4.6 percent, to $39.29 a barrel, while US West Texas Intermediate crude fell $2.05, or 5.2 percent, to $37.52.

Earlier in the day Brent traded to its lowest since Oct. 2 and WTI its lowest since Oct. 5.

Futures pared losses somewhat after the US Energy Information Administration (EIA) said a bigger-than-expected 4.3 million barrels of crude oil was put into storage last week, but slightly less than industry data late Tuesday which showed a 4.6 million-barrel build.

However, crude production surged to its highest since July at 11.1 million barrels per day in a record weekly build of 1.2 million bpd, the data showed.

Gasoline demand has also been weak overall, down 10 percent from the four-week average a year ago. US consumption is recovering slowly, especially as millions of people restrict leisure travel with cases surging nationwide.