Airbus is to boost production of its A330 planes, partially reversing a previous decision to build fewer of the wide-body jets.
Point of view
Our customers, believe it or not - largely thanks to the oil and kerosene price - are globally, financially in very good shape
That is partly linked to a provisional order from Iran for 45 of them.
The earlier production cut – from 10 planes to seven per month – was intended to move customers towards updated versions of the A330 and the launch of its new A350.
Airbus also announced it has record numbers of orders. Chief Executive Officer Tom Enders told reporters: “We’ve seen another year of robust performance in commercial aircraft. Our customers, believe it or not – largely thanks to the oil and kerosene price – are globally, financially in very good shape.”
When crude oil prices were well over $100 a barrel airlines were desperate to get their hands on more fuel efficient planes.
So, with the collapse in oil prices will that still be the case?
Jeremy Cook, Chief Economist with World First, thinks there is no need to worry: “Oil prices are low and may head lower, but this isn’t a longer term issue for markets; and oil prices may repair up to $50,$60,$70 a barrel, then you’d have to say that airlines are still going to be looking for fuel efficient vehicles with which to operate their business.”
Airbus Group said 2015 operating earnings before one-off items rose 2 percent to 4.13 billion euros as revenue gained 6 percent to 64.45 billion. However the European planemaker gave a cautious outlook for this year, underlining what many analysts see as a tricky, transitional year between old and new models for it and US rival Boeing.
It received orders for 1,080 jetliners last year, which means it has a backlog of 6,800 aircraft.
There are plans to deliver 650 this year, up from 635 in 2015, thence its focus on increasing productivity.
Euronews spoke with Airbus Chief Financial Officer Harald Wilhelm about that.
euronews: “By the look of Airbus’ record order book, the biggest challenge will be actually to deliver all these planes on time. How are you going to achieve that?
Harald Wilhelm, Airbus Chief Financial Officer: “Take the example of the A350 – you might say ‘Oh, you produced 14 aircraft in 2015 and in 2016 you are going to produce more than 50, how does that work?’ Actually as we speak, we already have more than 30 aircraft on the final assemby line. So we are running the rate up as we speak. And that means making sure that the supplies of parts coming from everywhere in the world are there on time, and at the quality needed.”
euronews: “Two trade unions have protested against your decision to ask employees to clock in already in their work clothes. What’s happening with that?”
Harald Wilhelm: “That’s under discussion. All in all, you know, this is one step where we want to further increase the efficiency in our plants. So you can see that as a demonstration of our productivity efforts.
euronews: “Can you get the unions on board?”
Harald Wilhelm: “I’m very trustful that they will find a resolution on that.”
euronews: “How is the sharp fall in oil prices impacting demand for fuel efficient planes?”
Harald Wilhelm: “I know that’s an area of question marks and concerns for many, and I understand why. But let’s look at the facts. Since the oil price started to drop at the end of 2014 we did not see a decline in orders and how can we explain that? That oil price situation helps to improve the profitability and the cash situation of our customers, so it makes the acquisition of the fuel-efficient aircraft very affordable for the future times when the fuel price might be higher.”
euronews: “Qatar Airways warned last week that the slowdown in emerging economies, mainly China, could have a negative impact on the airline industry. Do you share those worries?”
Harald Wilhelm: “I’m not saying that there might not be a risk here and there, that some customers might take perhaps a bit less aircraft than scheduled at the beginning or re-adjust. Our massive backlog of 6,800 aircraft allows us to do that and to accomodate.”
euronews: “Airbus employs more than 16,000 people in the United Kingdom. What if UK voters decide to leave the European Union in June, what are the consequences for Airbus UK operations?”
Harald Wilhelm: “Clearly, as industrial and business people, we prefer that the UK stays in the EU. We have a clear framework in place, which is good for the efficiency of Airbus at large, but also for the efficiency and the investments in the UK. Our preference is very clear: for the UK to stay inside.”