From European dream to global giant: Airbus marks half century

The logo of European aircraft manufacturer Airbus outside entrance of the site of Airbus' Wings Campus in Blagnac. (AFP)(File/AFP)
Updated 29 May 2019

From European dream to global giant: Airbus marks half century

  • Its story has been marked by setbacks, political turbulence and production problems but Airbus management believes it can confidently look forward to the next half century
  • The aircraft paved the way for the more fuel efficient A320neo which has become the backbone of the company

PARIS: Fifty years ago at the Paris air show, France’s transport minister and Germany’s economy minister signed an agreement that would change aviation history.
The year was 1969 and Europe needed a smaller, lighter and more cost-effective passenger aircraft than American rivals. Five years later, the A300B2 was born, a short-to-medium range plane with two engines, despite safety concerns in an era when three engines was the standard minimum.
Fast-forward to 2019, Airbus is celebrated as a success of European cooperation, one of two kings of global civil aviation along with Boeing. Around the world, an Airbus takes off or lands every two seconds.
It now produces passenger planes ranging in size up to the A380 jumbo jet, helicopters, fighter jets and is even involved in space exploration.
Its story has been marked by setbacks, political turbulence and production problems but Airbus management believes it can confidently look forward to the next half century.
“Airbus produces half of the world’s large commercial aircraft and has thriving helicopter, defense and space businesses,” said CEO Guillaume Faury, who in April replaced Tom Enders who served five years at the helm.
“We employ 130,000 highly-skilled people globally and are a powerful engine of productivity, exports and innovation for Europe.”
The firm delivered its last thousand planes in just 30 months. But in the early days, it took nearly twenty years to produce a thousand aircrafts.
It faced criticism for developments like fly-by-wire controls, which improve handling, and flight envelope protection, which stop the plane performing maneuvers outside its performance limits.
Apart from technological advances, cracking America was a key ingredient in creating the global giant. The A300 made a strong impression on Frank Borman, the former Apollo astronaut who headed Eastern Air Lines and championed the idea of buying more economical planes.
In 1984, Airbus launched the A320, a single-aisle, medium-haul aircraft to challenge Boeing, which until then had dominated the largest segment in the civil aviation market.
The aircraft paved the way for the more fuel efficient A320neo which has become the backbone of the company, strengthening its hold on the key market segment after Boeing’s 737 MAX planes were grounded after two deadly crashes in March and October.
Despite a failed deal with British defense firm BAE Systems in 2012, Airbus’ partnership with Canadian Bombadier’s C Series program in 2018 enhanced its position as a global force.
France and Germany still hold 11 percent stakes in Airbus through holding companies with a smaller 4 percent stake held by the Spanish government. The rest of the shares are traded on the stock exchange.
But production hasn’t always run smoothly. The firm announced in January it would scrap production of its A380 passenger giant by 2021 due to lack of orders.
The double decker jet earned plaudits from passengers but failed to win over enough airlines to justify its massive costs.
Key clients have also hit trouble as some airlines hit financial difficulty with Europe’s third biggest low-cost airline Norwegian saying it was further delaying deliveries of Airbus and Boeing 737 MAX planes it had ordered.
The company in April reported a slump in first quarter net profits which fell 86 percent from the same period in 2018 at 40 million euros ($45 million).
Airbus is also under investigation in France, Britain and the United States after disclosing transaction irregularities in 2016, while US President Donald Trump has threatened the European Union with new tariffs if it does not end subsidies to Airbus.
But analysts see Airbus as having an opportunity to profit from the booming airline market, particularly in Asia, and from the global grounding of Boeing’s 737 MAX series plane after two recent deadly crashes involving the popular new airliner.
Airbus’s boss Guillaume Faury said the firm aims to continue being a leader in aviation innovation.
“The aerospace industry stands on the cusp of a technological revolution to match anything in its history,” he said.
“European aerospace should aspire to lead this coming revolution in innovation and the transition to a more sustainable aviation sector.”


WEEKLY ENERGY RECAP: Strong demand, despite ample supply

Updated 10 min 35 sec ago

WEEKLY ENERGY RECAP: Strong demand, despite ample supply

Brent crude rose above $63 for the first time in more than seven weeks despite a bearish International Energy Agency (IEA) 2019 outlook that was published shortly before the monthly report from the IEA.

As usual, that highlighted weak demand and rising non-OPEC supply of some 2.3 million bpd in 2020, which is higher than the 1.8 million bpd this year.

The Paris-based organization opined that this would eat from the Organization of the Petroleum Exporting Countries (OPEC) market share and lead to a decline in OPEC’s crude oil output by around 1 million bpd.

However the IEA neglected to report that the US oil and gas rig count continued to fall for the 12th time in the past 13 weeks. 

According to Baker Hughes data, the total oil and gas rig count dropped to 806. 

Still, Brent crude still continued to hover in a narrow range most of the year trading sideways at around $60 per barrel both prior to and after the Sept.14 attacks on Saudi Aramco oil facilities. 

Year to date, Brent crude rose above $70 per barrel only for a short time during April and May and never made it above $80 per barrel, unlike last year.

Oil prices managed to edge higher despite the 2.2 million barrels build in US crude oil inventories, which makes it the 9th rise in US crude inventories for 8 weeks, that added a total of more than 40 million barrels of oil to US commercial inventories, as reported by the US EIA.

The IEA continues to push the thesis that higher US output will shrink the market share of OPEC members and Russia in total oil production. 

The timing of this conclusion is very questionable ahead of OPEC’s early December 2019 meeting, as it is premature to conclude that OPEC+ producers will face a major challenge in 2020 as demand for their crude is expected to fall sharply.

The IEA also irrationally emphasized that the market is currently well supplied not only from the US, but also from relatively new growth prospects like Brazil’s offshore fields, and even from older, mature Norwegian fields in the North Sea.

The IEA completely ignores the market’s strong fundamentals. For instance, China’s refining capacity remains historically high at 13.68 million bpd, jumped 9.2 percent, or around 1.15 million bpd year on year, according to data from the China National Bureau of Statistics. 

Consequently, China’s crude oil imports surged 1 percent year-on-year to hit a historical high of 10.76 million bpd in October. 

Higher demand is further expected as refineries in China will strive to maximize petrochemical yields ahead of the Christmas manufacturing season. 

Another market positive downplayed by the IEA is the strength in the physical sour crude oil market, representing tighter supply fundamentals.

Such factors suggest the market may be in better shape than the IEA suggests.

 

Faisal Faeq is an energy and oil marketing adviser. He was formerly with OPEC and Saudi Aramco.  Twitter:@faisalfaeq