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Airbus's demand is not affected by geopolitical factors
Airbus' Asia-Pacific President said on Tuesday that the geopolitical and supply chain challenges have not affected aircraft demand or deliveries. Anand Stanley, Airbus Asia-Pacific's President, said that the demand for Airbus aircraft in Asia-Pacific was "continuing to be strong". He made this statement during a Hong Kong briefing on Airbus' 2026-2045 Market Forecast. He said: "Not only do we see an increase in deliveries, but also a willingness to accept deliveries. This is not just in Asia-Pacific. We are also continuing to deliver in the Middle East." Airbus predicts that 42,000 new aircraft will be needed globally in the next 20 year, with 45% of them going to the rapidly growing Asia-Pacific region. Francois Cabaret of Airbus, the head of global forecasting, stated at an event that Chinese carriers have a lot to catch up on when it comes to renewing their fleets. Cabaret reported that before the COVID-19 pandemic Chinese airlines took about 400 'deliverys a year. Since then, the number of deliveries from Airbus Boeing and Chinese planemaker COMAC has fallen to less than half. Airbus data indicates that China, the'single biggest market for commercial jets', will require 8,830 new aircraft in the next 20 years. India will also need 3,480 and the rest of Asia-Pacific 6,880. Airbus' forecast also showed divergent growth in Asia. Airbus has raised its forecast for India's domestic air traffic growth to 9.3%, from 8.9%. China's is cut to 4.7%, from 5.4%.
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Saudi oil prices rise as pipeline problems and fresh attacks raise supply concerns
Oil prices increased on Tuesday, as fears of supply disruptions continued - after attacks on Saudi Arabian infrastructure that left the Kingdom's East West pipeline offline and cast doubt on efforts made to reduce shipping risks in Gulf. Brent crude futures were up $1.37 or 1.3% to $107.05 per barrel by 0406 GMT. Meanwhile, U.S. West Texas Intermediate futures rose $1.53 or 1.51% to $102.92 per barrel. Both benchmarks were up more than 1% the previous session. Iran-backed Houthi in Yemen launched new attacks on Saudi Arabia Monday. Gulf Arab states postponed scheduled discussions with Iran. This fuelled concerns that the Middle East Conflict could expand and disrupt global oil supplies. In retaliation to Saudi airstrikes in Yemen, the Houthis launched a missile attack and used drones on the Khamis Mushait Military Airbase in southern Saudi Arabia. They targeted aircraft hangars as well as radar systems, runways, and ammunition depots. The attacks were attributed by Riyadh to Iranian-backed fighters based in Iraq. They disrupted Saudi Arabia's East-West oil pipeline that allows the country to bypass the blockaded Strait of Hormuz. Tim Waterer is the chief analyst at KCM Trade. He said that oil traders treat every new attack or infrastructure damage as an incremental "supply risk" and are highly alert to any sign of a possible normalisation in the East-West Pipeline or Hormuz flow. The number of commodity vessels transiting the Strait of Hormuz fell to fewer that 10 a day on the weekend from a 10-day daily average of 14. This is a significant drop for a route which carried approximately one-fifth of the global oil supply before the U.S. and Israeli war?on Iran started on February 28. Saudi Arabia may exhaust its oil exports within days, if it does not restore operations on the East West pipeline. This could remove?as high as 4% of the global oil supply, according to Saudi traders and buyers. The world's largest exporter used the pipeline to redirect around 4 million barrels of oil per day -- about 4% of the global supply -- to port of Yanbu on the Red Sea. There is still a lot of uncertainty about the extent of damage and the duration of outage of the East-West Pipeline in Saudi Arabia. Prices will likely remain stable until we 'get clarity,' ING analysts stated in a?"note". Separately on Monday, Volodymyr Zelenskiy stated that Kyiv would only support the U.S. proposal of a ceasefire between Russia and Ukraine on energy sites if Washington could guarantee that Moscow was truly ready to end its conflict with Ukraine.
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The weather is bad on the third day of searching for 129 people missing in Indonesia after a ferry capsizes.
Officials said that rough seas hindered Indonesian rescuers as they searched for 129 missing people after a passenger vessel capsized in the Java Sea three day ago. Officials said that if weather conditions improved, rescuers, who are currently only conducting air and sea surface searches for survivors, would 'launch underwater operations to search for them in the sunken vessel. The Virgo transport 8 ship, which was carrying 243 passengers, went missing early Sunday morning due to bad weather. Six people are confirmed dead and 108 have been rescued from the ship, which was traveling from Surabaya (East Java) to Banjarmasin (South Kalimantan). I Putu Sudayana is the head of Banjarmasin Rescue Agency. He said that on day three, rescuers deployed 1,100 coastguard and navy personnel, as well as 10 helicopters and aircraft, and 17 vessels. "Weather remains the same as yesterday. It is not favorable this morning." "Wave still high, between 1,75 metres and 2.5 metres (5.7-8.2 ft)," he said. Mohammad Syafii told reporters that the bad weather on Monday prevented rescuers from carrying out underwater searches for the missing. He added that rescuers had not found any new bodies or survivors during the search on Monday. Syafii stated that the agency's team would continue to monitor the weather conditions on Tuesday to determine if underwater rescue operations can proceed. Syafii stated that underwater rescue will involve specialists from the Navy and rescue agency capable of diving at depths greater than 100 metres (328 ft), Syafii. He added, "Of Course we still hope to find the victims alive." Syafii added that the navy would also deploy its Canopus vessel, which is equipped with a?underwater drone and a multibeam echoe-sounder for locating potential targets, as well as a remotely controlled vehicle (ROV) to make closer assessments. Divers could be safer in low visibility, with strong currents or around a capsized ship. Syafii stated that underwater operations were difficult because the capsized vessel was unstable. It could move unexpectedly due trapped air and empty compartments. Divers may also experience sudden pressure changes. He said, "We're also looking at?how we can turn the ship back up from its current position." The ship has now reached a depth 30 metres (98 feet) and the authorities are looking at pulling it back to the surface.
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Saudi Arabian pipeline disruption and fresh attacks on supply raise concerns about oil prices
The price of oil rose on Tuesday, as fears about supply disruptions continued after an attack on Saudi Arabia's?energy infrastructure knocked the East-West pipeline off line and cast doubt on efforts to reduce shipping risks in Gulf. Brent crude futures were $1.24 higher, 1.18% to $106.93 per barrel at 0026 GMT. They had risen 1% the previous day. U.S. West Texas intermediate futures were $1.29 higher, 1.24% to $102.65 per barrel after rising 1.3% during the previous session. Iran-backed Houthi troops in Yemen launched new attacks on Saudi Arabia Monday. Gulf Arab states delayed planned discussions with Iran. This fuelled concerns that the Middle East Conflict could expand and disrupt global oil supplies. In retaliation to Saudi airstrikes in Yemen, the Houthis launched a missile attack and used drones on the Khamis Mushait Military Airbase in southern Saudi Arabia. They targeted aircraft hangars as well as radar systems, runways, and ammunition storage depots. The attack on Saudi Arabia on Friday, which Riyadh attributed to Iranian-backed fighters in Iraq disrupted Saudi Arabia's East-West Pipeline, which allowed oil exports to bypass the blocked Strait of Hormuz. Tim Waterer is the chief analyst at KCM Trade. He said that oil traders treat every new attack or infrastructure damage as an incremental risk to supply. They are also highly alert for any signs of a possible normalisation in the East-West Pipeline or Hormuz flow. The number of commodity vessels transiting the Strait of Hormuz fell to less than 10 per day on the weekend from an average of 14 over the past ten days. This is a significant drop for a route which carried approximately one-fifth of the global oil supply before the U.S. and Israeli war against Iran began on 28 February. Saudi Arabia may exhaust its oil supply within days, if it does not re-establish operations on the East West pipeline. This could remove as much as 4% from global 'oil supply,' according to Saudi traders and buyers. The world's largest exporter used the pipeline for a rerouting of around 4 million barrels a day --?around 4% global supply?- to the port of Yanbu, on the Red Sea. The big question for traders is how long the East-West blackout will last. Waterer said that any prolonged disruption, and the resulting loss of supply, could easily push prices up to the next level. Separately President Volodymyr Zelenskiy stated on Monday that Kyiv would support the U.S. proposal of a Russia-Ukraine energy ceasefire only if Washington can ensure Moscow is genuinely prepared to end its conflict with Ukraine.
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French power sector strikes shut down 6.5 gigawatts overnight
EDF data shows that a French labor strike in the 'electricity sector' took 6.5 Gigawatts of power offline overnight on Monday as unions protested a recommendation to curb employee benefits like access to cheaper electricity. The main source of electricity cut was seven French nuclear reactors. Several hundred megawatts from?gas-fired or hydroelectric power were also taken offline. France produces about 70% of its electricity with its 57 reactor fleet. It is also a major?exporter at a time where power prices are high, as countries like Germany that rely on gas have to pay a higher price to generate electricity. Data from EDF shows that the disruption lasted until Tuesday morning. The strike is expected Tuesday to continue through the entire day, which means that the outages may be increased or renewed. The French energy sector offers discounted gas and electricity rates to workers and retirees. Their?unions consider this a key part of their compensation package. In July, the French Court of Auditors recommended that EDF stop receiving this benefit. They estimated it would cost EDF more than EUR700 million (808.22 million dollars) in lost revenues by 2024. The court recommended that EDF limit annual wage increases and phase out its energy benefits. EDF is facing major investment costs in upgrading its nuclear fleet, and planning new reactors.
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AirBaltic CEO: AirBaltic is in negotiations with unions about reducing staff as part of restructuring.
AirBaltic has been in discussions with the labour unions in order to reach an agreement regarding an "adjustment of?the workforce", Chief Executive Erno Hilden said on?Monday, after the Latvian airline announced that it had voluntarily entered Chapter 11 bankruptcy proceedings. Hilden stated that a reduction in capacity would lead to a shift in the workforce. It's time to come up with some numbers after all that. AirBaltic filed under Chapter 11 of the U.S. Bankruptcy Code on Monday in New York. It is seeking to restructure its debt, avoid creditors and survive a 'deepening crisis within the sector brought about by the Iran War. Hilden was previously the CFO of Scandinavian Airlines, where he led the company through a similar process. He added that airBaltic operations would not be interrupted or changed during the Chapter 11 proceedings. He said the most significant changes would be made to the "wet leasing" business of the airline, which involves lending out planes and crews to other carriers for a fee. Chairperson of the Latvian Aviation Union,?Dacekavasa, said? The Latvian aviation union's chairperson,?Dace Kavasa, told? The consultations on collective dismissal are still ongoing. Many unknowns exist. Kavasa stated that there are serious disagreements about the objectivity of certain?proposed criterion. They hoped for some positive decisions to be made by the end the week.
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Wizz Air CEO: AirBaltic and other carriers are at risk
Wizz Air's CEO Jozsef Varradi said that the bankruptcy of airBaltic offers few, if any, opportunities and expects other European airlines to be affected by this. These airlines were unable?to hedge against high fuel prices. ?on Monday. Varadi, speaking at a conference organized by the International Society of Transport Aircraft Trading, said that the recent spike in oil prices "sucks liquidity from the industry very quickly." "I believe they'll be in a difficult situation." Wizz, the Latvian state-owned airline and airBaltic are located at opposite ends of Europe’s vast aviation market. Both have been shaped over the past two decades by Europe’s eastward expansion followed by a collapse in relations with Russia. Varadi stated that "there are no Russians now, and airBaltic just is too big for such a small market as Latvia." Does it interest us?" "Very limited to be honest... Latvia is on the 'periphery of Europe, then you have a Russian border. "So, given the current geopolitics, how can you implement that concept?" Varadi founded Wizz with eight other countries in 2003, just as Hungary and Latvia were about to enter the European Union. Moscow's invasion in Ukraine 2022 harmed its network, but it continued to grow. AirBaltic set out to be a regional hub carrier, but the loss of Russian routes, traffic, and high fuel prices left it reeling. Since the beginning of the Iran War, airlines around the world have been struggling with high oil costs. Varadi, a representative of ISTAT, said that Wizz has hedged 80% its oil needs for the next 12 months at half market price. Varadi said that this year will be bumpy for the oil industry as it deals with oil prices and geopolitics, but there could also be opportunities. "We've noticed a vacuum in Italy. He said that we were "pushing" a lot more capacity to Italy, Romania, Albania, and other places.
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Winter is on its way: AirBaltic's debt woes presage a tough season for smaller airlines
The aviation industry is bracing itself for a difficult winter after Latvian airline airBaltic filed Chapter 11 procedures?on Monday. Jet fuel prices are continuing to rise due to the Iran War. AirBaltic, a U.S. competitor, filed for bankruptcy in May, after seeking protection prior to the war. The margins of airlines are relatively small compared to those in other industries, making them more vulnerable to geopolitical instability, especially in winter, when bookings and travel drop, and they lose the money they made in summer. SAVING RETURNS The price of jet fuel is expected to remain high for as long as the Strait of Hormuz is blocked. This will put additional pressure on smaller carriers. Aviation analyst John Strickland said that smaller niche players were most at risk. The fuel price has doubled since the beginning of the war in late February. However, there are some advantages for larger budget airlines. Last month, Wizz 'Air reported that its operating losses had increased in the first three months. It also said it expected revenue per seat in the current third to continue to fall after cutting fares in order to attract more passengers. In August, they reached an 'all-time high of 8.7 million passengers. Wizz Air, supported by strong liquidity and a disciplined hedge programme, continues to grow, invest and serve more customers. James Halstead of Aviation Strategy said that Wizz Air's stock market listing puts it in a stronger position than state-owned carriers. "They're growing fast, which means they're sacrificing current returns for future stability. He said they have a good operating model, a great brand, and support. AirAsia, a budget airline in Southeast Asia, is looking to raise new capital following a restructuring and consistent losses, while Air Transat, a Canadian carrier, has been struggling with rising jet fuel prices. AirAsia stated that it did not see any problems with the sustainability of its business and saw a strong demand at the underlying level. AirAsia stated in a press release that it is committed to maintaining stable operations and business continuity across its markets. We continue to see a strong demand for our services across the network. "We also work closely with our stakeholder to manage our financial requirements and operational needs." Air Transat didn't immediately respond to our request for a comment. More routes for bigger players Executives and investors have said that a tough market may force some smaller national carriers to cede their routes to bigger, more well-funded rivals. Analysts say that budget airlines like Ryanair and Wizz air could pose a threat to them. These airlines have taken over secondary airports in an effort to grow and are now offering better prices for consumers. Wizz Air CEO Jozsef Varadi told reporters in August that the airline was eager to take over routes from Romanian state-backed carrier TAROM. TAROM didn't immediately respond to a comment request. The more difficult market conditions may accelerate the long-term trend in Europe of consolidation. This could push some smaller carriers to larger?groups, such as British Airways' owner IAG, Lufthansa, and Air France-KLM. Norse Atlantic has started in July a process of?sale' or?merger. It did not respond immediately to a comment request. Since years, the state-owned Polish carrier LOT is suspected of being a target for consolidation. LOT did respond immediately to a comment request. AirBaltic said that it was 'looking for another strategic investors, but no one has yet publicly expressed interest. Lufthansa has a 10% stake but says it doesn't intend to increase that stake. It refused to comment on its possible next steps in light of airBaltic's Chapter 11 proceedings. Analysts said that airBaltic could still survive and recover from Chapter 11 proceedings, unlike Spirit. Strickland cited the Scandinavian competitor SAS as an example of how to turn things around.
Retailers scramble to save the US summer shopping season
After Washington and Beijing agreed on a temporary tariff cut, U.S. retailers such as Walmart and several clothing companies are racing to get China-made products for the busy summer season that begins in late May. According to Portless, the logistics company that helps U.S. brands import goods via air from China, orders for sundresses as well as bathing suits, clogs, and sunscreens have increased since Monday's agreement between Washington and Beijing to temporarily lower tariffs.
Izzy Rosenzweig is the CEO of Portless. Portless counts Hapari swimwear and bug repellent manufacturer NatPat as clients. "They said, 'let's resume production and shipping.'
John Harmon, managing Director of Technology Research at Coresight Research said that U.S. companies rely heavily on ocean shipping. However, it can take up to 60 days to get goods from China to the United States, depending on their destination and the size of the ship. Orders for summer can be placed in the late winter or the early spring, to allow time for new designs to be manufactured.
Typically, U.S. retailers begin importing merchandise from China two to three months prior to Memorial Day this year. After U.S. President Donald Trump slapped Beijing with retaliatory fentanyl and tariffs totaling 155% on April 9, many U.S. firms paused orders. According to Vizion, data from brokerage TD Cowen on container bookings to the U.S. from China in the final week of April fell by nearly 50%.
Harmon says that it could take a while to restart supply chains following the April pause.
"It's been super busy the last two days," said Liu. A toy maker from Dongguan, an export hub in Southern China who declined to reveal her full name out of respect for her privacy.
"We're booking containers, and some of our products are already on their way to Shenzhen Port." "In recent months, there were fewer trucks on the road, but today, there's a traffic jam heading to the port," Liu said. Liu serves Walmart, which is the largest importer of container goods in the United States.
CONTAINER COSTS WORRIES
Freight rates are not rising despite the rush to get goods to the U.S. Freightos data shows that the spot rate for a 40-foot (12-meter) container to be sent from China to U.S. West Coast increased 3% on a week-to-week basis to $2,395 Monday. This indicates that businesses are not flooding shippers with orders.
The price is now half what it was in February when large companies were stocking up to avoid the tariffs that Trump had promised.
Companies like Bogg Bag, however, are beginning to worry about container costs going through the roof. Kim Vaccarella said that the CEO of a tote bag maker sold by retailers such as Target has accelerated production for her China-made bags to ensure they arrive in New Jersey as soon as possible. She has chosen to focus on a few products that are popular instead of launching many new items at once. This allows them to move quickly. Walmart, who reported earnings on Thursday, as well as Costco and Target, rival retailers, front-loaded their orders at the beginning of the year. CFRA research analyst Arun Sunderam wrote on May 13 in a note.
Sundaram reported that Walmart's inventory rose by about 3% during the quarter ending January 31. This was the first increase in almost two years.
In the three-month period ending in February, Costco's inventories rose by nearly 10%. Zumiez, a retailer of surf and skateboard clothing, saw their inventories rise about 14%. Target's inventory rose by 7% in the same time period.
Sundaram, a freight expert who anticipates an increase in freight prices, says that while the tariff reprieve on Monday is likely to be a boon for U.S. companies eager to stockpile summer merchandise, it may also create supply-chain congestion, although this will probably be less severe than the pandemic year of 2021-2022. On Wednesday, some Halloween decor manufacturers said they'd have to rush to make and ship hanging skeletons as well as costume props into the United States before the 90-day deadline.
Gene Seroka said that businesses might not be able prepare fully for the summer as well as back-to school in July, which is another major retail season.
Right now, we are looking at the final orders that will be sent in for back to school and perhaps some orders for summer fashion. Seroka explained that the situation was very tight.
Stephen Lamar of the American Apparel & Footwear Association (of which Adidas America is a member) warned of congestion in ports if companies rushed to import goods.
The tariff war has caused a delay of a month in the shipping back to school. Lamar said that school districts cannot delay the start of school for a whole month. (Reporting from Siddharth Cavale in New York, and Casey Hall and Jessica DiNapoli at New York; Additional reporting from Lisa Baertlein and Matthew Lewis in Los Angeles. Editing by Lisa Jucca & Matthew Lewis.
(source: Reuters)