Aviation
Airbus Shrugs Off Canceled Plane Orders
BEIJING – Airbus Group NV Chief Executive Tom Enders on Wednesday said a flurry of order cancellations for its commercial jetliners doesn’t herald a market downturn and that many of the deals for single-aisle jets will return at a later date.
Net commercial jet order intake this year already is ahead of planned deliveries with “a lot more orders” to come, Mr. Enders said. “The market is still very strong” with weak spots such as Asia merely regional blips, he said.
Airbus on Tuesday reported a 31% rise in second-quarter net profit to €696 million ($933.3 million) as sales advanced 7% in the quarter to €14.5 billion. The company’s shares rose more than 3.7% in early Paris trading.
Airbus has suffered more than 225 order canceled this year, including a decision by Emirates Airlinenot to acquire 70 A350 long-range jets. That number isn’t alarming, Mr. Enders said, with only the Emirates development truly unforeseen.
Cancellations particularly of the A320 single-aisle jet, the backbone of Airbus production, are driven partly by a transition to a newer model, the A320neo for “new engine options,” Mr. Enders said. Deals with airlines that normally would delay A320 orders are now being canceled because the Toulouse-based plane maker wants to quickly shift to building only the A320neo, which starts being delivered next year.
“We have to cancel these old orders and these are normally transferred into new orders,” Mr. Enders said. More A320 cancellations of this type are likely this year and next, he said. In some cases, the replacement deals are booked at better financial terms, Mr. Enders said.
His comments come just a day after Airbus said it had canceled the sale of six A380 superjumbos to Japan’s Skymark Airlines. 9204.TO -13.60% Two of the planes have already been assembled leaving the manufacturer to seek other buyers at a time it has struggled to win new orders for its flagship plane.
Mr. Enders said not delivering the Skymark planes wouldn’t undermine a long-standing goal for A380 shipments next year to reach break even after years of losses. The deal with the Japanese carrier was canceled before the complex cabin interior was installed which should make re-marketing the plane easier, he said.
Other A380 customers have also indicated they may not want the jet, such as Virgin Atlantic Airways. “We have cases where airlines are in the order backlog but not in the actual production plan,” Mr. Enders said, without naming specific airlines.
Sales campaigns are ongoing to secure more A380 orders, he said, while acknowledging “the very large aircraft category is a weak category.”
Additional jetliner bookings this year will also come from a decision to introduce an upgraded version of the A330 widebody at the Farnborough air show this month, Mr. Enders said. The world’s second-largest plane maker secured $75.3 billion in deals at the event.
The so-called A330neo is due for delivery from late 2017 and promises 14% greater efficiency over the existing model largely by adding new engines from Rolls-Royce Holdings RR.LN +0.38% PLC.
The A330 has been an important contributor to Airbus profit, but the existing version was starting to run short of orders as more fuel-efficient planes such as the Boeing Co. BA -0.60% 787 Dreamliner entered the market. Airbus has won 127 commitments for the A330neo jet and it projects demand to top 1,000 aircraft.
To help boost profit, Airbus has embarked on a wide scale restructuring, including integrating its defense and space units to help lift profitability. Those efforts are progressing well, Mr. Enders said.
As part of its restructuring plan, Airbus said it is studying disposal options for its nonvoting share in Dassault Aviation SA, AM.FR +1.66% the maker of business aircraft and the Rafale combat jet. Airbus has a 46% stake in the company. The French government has the right of first refusal on the disposal of some or all of the stake.
“We want to monetize that participation,” Mr. Enders said. “It is not a question of if it is a question of when,” he said. Airbus has faced investor pressure to shed the stake which Mr. Enders saying the company was “actively engaging” on the issue.
Airbus maintained its full-year guidance of moderate returns on sales growth this year while reaching 7% to 8% returns in 2015, not counting development costs of the A330neo. Those will crimp return on sales next year, the company said when it launched the project.
The world’s second-largest plane maker, like rival Boeing, relies heavily on titanium from Russia to make its jets. Mr. Enders said the company’s relationship for titanium raw material and forgings from VSMPO, the world’s biggest titanium supplier, is stable.
“I do not expect the flow of it will be cut off short of all-out war,” Mr. Enders told analysts on a call as the European Union imposes further sanctions on Russia over the country’s efforts to destabilize Ukraine. Airbus is exploring potential mitigation action to protect against supply disruptions.
Airbus’s newest long-range jetliner, the A350, is in its final test phase before regulators signoff on the design, clearing the way for the first jet to be delivered to lead-operator Qatar Airways Ltd. before year-end. “The A350 program remains challenging,” Airbus said in the statement, though certification for safety authorities remains on track for this quarter.
– WALLSTREET JOURNAL
In a bold step to strengthen Akwa Ibom’s position in Nigeria’s aviation industry, Governor Umo Eno announced the addition of two new Bombardier CRJ900 aircraft to the fleet of the state-owned airline, Ibom Air, on Friday.
The two aircraft, registered as 5N-CED and 5N-CEE, mark a milestone in the state’s commitment to strategic investment, with the governor stressing that the acquisitions were fully funded by state resources without loans from financial institutions.
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At a welcoming ceremony attended by local officials and residents, Governor Eno emphasized his administration’s mission to drive revenue-generating ventures for Akwa Ibom rather than relying on debt.
He called the move a step toward breaking the cycle of government investments that only serve to pay off loans, vowing that the state’s funds would go towards projects that bring returns to the people.
The governor challenged Ibom Air to turn a profit by 2025, stating that the airline’s management should ensure routes in and out of Uyo remain dependable to prioritize the needs of Akwa Ibom travelers.
“As long as I remain governor, we will continue to use state funds for the benefit of all, not for private gain,” he said, noting that his administration aims to ensure that public investments deliver real value to the state.
Governor Eno also provided updates on several ambitious state projects, including an 18-story commercial complex underway in Lagos and an upcoming 4-star hotel in Abuja, both designed to generate revenue for Akwa Ibom.
Plans for an international market in Ikot Ekpene and the phased opening of a new terminal at the Victor Attah International Airport were also announced, with the airport terminal set for partial operation by December and full activation in early 2025.
Speaker of the Akwa Ibom State House of Assembly, Udeme Otong, commended Eno’s financial management, highlighting that the administration has avoided seeking loans over the past 18 months despite launching significant development projects.
Ibom Air’s Chairman, Pastor Imoabasi Jacob, expressed appreciation for the state’s investment in the airline, which has seen its fleet grow to nine aircraft.
Jacob credited the governor’s support with enabling Ibom Air to boost flight capacity, meeting demand on popular routes such as Uyo-Lagos-Abuja.
Captain Mfon Udom, CEO of Ibom Air, stated that the expanded fleet will improve efficiency and allow the airline to scale up its operations in time for the Christmas travel season.
Udom also noted that the airline anticipates the delivery of nine additional Airbus planes, which will further strengthen Ibom Air’s market presence.
Traditional leaders, including HRM Edidem Ita Edet Okokon III of Okobo Local Government Area, lauded the governor’s leadership, pledging continued support from the traditional institutions.
Anie Essienette, Group Manager for Marketing and Communications at Ibom Air, noted that demand for the airline’s services has surged nationwide, with the new CRJ900 aircraft helping meet this increasing need while the airline awaits further fleet expansion.
Nigeria’s Minister for Aviation and Aerospace Development, Festus Keyamo is of the view that there’s no cause for alarm over the approval of a private airstrip for a religious organisation, which attracted the attention of the House of Representatives.
He took to his verified handle on micro-blogging site, X, on Friday morning to shed light on the subject, and explained that it could be a great source of revenue for Federal Government.
Keyamo asserted that the issue was raised by an honourable member at plenary, out of ignorance, but was “unanimously referred to the Aviation Committee to look into.”
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Keyamo expressed confidence that by the time his Ministry was done enlightening them, “they will be satisfied”.
He added that “the privates air strip owners pay the Federal Government handsomely for these services.”
Keyamo wrote, “I think this is not correct. The House of Reps. as a body did not call on the Minister to revoke the license of any private airstrip.
“I think what happened is that someone moved a motion in that regard and it was unanimously referred to the Aviation Committee to look into it.
“Whilst the intention of the Hon. Member who moved it is very patriotic, it was based on a complete lack of knowledge of the aviation sector.
“By the time we explain to them how private air strips work and the processes they undergo by our agencies before the final approval, they will be satisfied.
“The responsibility of the owners of private air strips is just to build the runway and terminal building. But after they build the control tower in particular, it is completely handed over to the Federal Government through NAMA (Nigerian Airspace Management Agency) which is in complete control of the entire airspace in Nigeria. An MOU is usually signed with NAMA in this regard before the airstrip is approved for operations.
“It is NAMA that provides the Air Traffic Controllers and Engineers in ALL AIRPORTS and AIRSTRIPS IN NIGERIA. And the privates air strip owners pay the Federal Government handsomely for these services.
“No object flies into Nigeria without the prior clearance by NAMA and without filing a clear flight plan, eg, where it is taking off from and where it intends to land.
“And I have recently directed that all aircraft coming into the country MUST first land at our international airports where they would be properly processed and checked before they make their local flights into whatever airport or airstrip they intend to go. So, it is COMPLETELY AND TOTALLY impossible for any private airstrip owner to just jump on an aircraft and fly in and out of the country through that facility. The Federal Government does not permit that. You will not be cleared for take off or landing without prior request and authorisation.
“I thank the Member for his patriotism, but I wish he contacted us first to explain to him before rushing to move such a motion.
“I attach herewith for public consumption the NAMA Act that gives exclusive control of the Nigerian airspace to the Federal Government through NAMA.”
The NNPC Ltd has clarified that beyond the three bodies found in the ill-fated helicopter operated by East Winds Aviation that crashed on Thursday in Port Harcourt, no other bodies have been recovered.
This was contained in a statement in Abuja on Sunday by the Chief Corporate Communications Officer, NNPC Ltd, Olufemi Soneye.
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“The Company further notes that intensified search and rescue operations for the remaining bodies along with relevant authorities is still ongoing.
“Once again, our hearts and prayers are with family members of this unfortunate incident,” the statement added.
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