Coronavirus, political and commercial problems for the Airbus A330neo

PARIS (Reuters) – Airbus (AIR.PA) is struggling to boost support for its wide-body passenger aircraft A330neo as the coronavirus crisis, geopolitics and trade wars raise new questions about demand for the plane, sources said. 39; industry.

The response included Airbus focusing on sales of the A330neo ahead of the other models, pressuring Chinese sales pending a possible economic recovery in the country while trying to tie orders to orders sales of its smaller A321XLR jets, which are in high demand.

European planner cut production of A330 in January to just over three per month, down from around four per month in 2019, and has not ruled out reversing that in 2021, people close to the group said. of the society. After that, the picture is much less clear, with doubts about dozens of existing orders as the coronavirus crisis worsens.

"2020 represents the trough (in production)," said a person close to the program.

Airbus shares fell 4% on Thursday after Bloomberg News announced that Airbus was considering production cuts, days after main buyer, AirAsiaX AAX.KL, said it wanted to postpone orders.

"We gave advice in February and are monitoring the situation closely," said an Airbus spokesperson.

Airbus announced last month that it was targeting 40 deliveries of A330 aircraft in 2020, up from 53 in 2019.

Industry sources said the AirAsiaX order, which had been blocked for a long time, had been restructured and integrated into last year's revised schedule, when it went from 66 planes at 78.

The last 12 jets are considered more deliverable than the previous 66, according to one of the sources. Others have wondered if the cash-strapped airline would take one of the planes.

Airbus launched the A330neo in 2014, promising an affordable and fuel-efficient successor to its 250-300 seat A330.

Financiers said rival Boeing (TO PROHIBIT) cut prices on some of its 787s to counter the A330neo, whose launch was also disrupted by a glut of big jets. Boeing officials denied launching a price war.

STRATEGIC HEADACHE

Pressure mounts as AirAsiaX encounters financial problems and the collapse of a nuclear deal between Iran and the West cancels another 28 orders. Together, AirAsiaX and IranAir represent a third of the 292 jets not delivered on order.

However, Airbus has experienced a number of breakthroughs, including a recent sale to GECAS, the leasing subsidiary of engine manufacturer General Electric (GE.N). GECAS, very rarely jets powered by Rolls-RoyceRR.L), like the A330neo.

But efforts to maintain this momentum are being undermined by market forces, analysts said, with agency analyst Partners Sash Tusa predicting that A330 deliveries are expected to drop another 25% to 30 planes in 2021.

The loss of the A330neo would represent a strategic headache, making Airbus largely dependent on its A350-900 in the lucrative widebody market. The smaller of the two versions of the A350 already accounts for almost 50% of its large fuselage order book.

Airbus said the A330neo and the larger A350-1000 will come out stronger as airlines renew their fleets.

However, strategists also fear that the problems with the A330neo will accelerate polarization in an industry in which Boeing dominates the wide-body and Airbus segment – supported by its A321XLR and the grounding of the Boeing 737 MAX – dominates the area of ​​narrow bodies.

In a surprise attempt to relaunch the program, Airbus recently reached an agreement to sell 40 of its A330neo aircraft to Hainan Airlines in trouble from HNA Group, Reuters China reported.

It seems to have bet that Hainan would be bailed out or bought by stronger Chinese carriers, making the A330neo a valuable place in their fleets, analysts said. HNA has asked for government assistance, but the result of the politically sensitive upheaval is far from clear.

Analysts say the cost of such transactions can be high. A source said that Airbus could lose up to 23 orders for the A350 and five for the old A330ceo as part of the HNA restructuring.

Tusa said the future of the A330neo was largely in the hands of the American carrier Delta Air Lines (DAL.N), which has been caught up in a separate political line.

Delta has ordered 35 aircraft, but faces tariffs on the A330neo as part of a long-standing trade battle between the U.S. and Europe. Delta made no immediate comments.