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Airbus shaves 20-year demand forecast, sees faster replacements

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November 13, 2021

By Tim Hepher and Alexander Cornwell

DUBAI (Reuters) – Airbus shaved its forecast for airplane demand by 0.5% compared with pre-pandemic projections on Saturday, offset by a brighter outlook for freighters as the world’s largest jetmakers fight for inaugural sales of large new cargo planes.

Airbus issued new long-term demand forecasts on the eve of the Dubai Airshow, where a battered aviation industry is reeling from the loss of two years’ growth to COVID-19, while striving to defend its environmental plans amid growing climate pressure.

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Airbus said it expected a market total of 39,020 jetliner deliveries in the next 20 years, fractionally lower than the 39,213 it predicted two years ago in its last rolling forecast.

The estimate for small planes like the best-selling A320 was essentially flat at 29,690 units, but the outlook for big jets that traditionally dominate the region fell 3.1%, reflecting a drop in long-haul travel on top of a glut of such aircraft.

The view echoes that of Boeing which in September cut its 20-year delivery forecast by 1% compared to 2019. That tempered greater pessimism seen from Boeing as the crisis peaked in 2020.

Airbus issued slightly weaker forecasts for medium jets – a key battleground that includes its longest-range narrrow-body jet, the A321XLR. Its sales have been causing a headache for Boeing at the top end of its recently troubled 737 MAX range.

Airbus slashed its forecast for average annual growth in passenger traffic to 3.9% from 4.3% in pre-pandemic 2019.

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“The fastest traffic growth will be in Asia with domestic China becoming the largest market,” Airbus said, indicating a permanent shift after China briefly grabbed the top spot in domestic air traffic from the United States during COVID.

Airbus raised its 20-year delivery forecast for new freighters by 2.9% to 880 units. It is in talks to find a first buyer for a proposed A350 freighter with airlines including Singapore Airlines, industry sources said.

Boeing said earlier it is in advanced discussions with potential buyers for a new 777X freighter. Market sources have said main contenders include Qatar Airways and FedEx.

Airbus said a rising share of total airplane deliveries would be to replace jets already in the market rather than to facilitate the recently curbed growth plans of many airlines.

That emphasis reflects expectations that airlines will retire less efficient jets earlier following COVID-19, but also// aims to tackle a sensitive point for the industry as some environmental groups target what they see as over-expansion.

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Faster retirements also worry suppliers and lessors who fear the average economic life of jets will fall, forcing them to miss out on service revenues or push up depreciation costs.

“As economies and air transport mature, we see demand increasingly driven by replacement rather than growth,” Airbus Chief Commercial Officer Christian Scherer said in a statement.

(Reporting by Tim Hepher, Alexander Cornwell; Editing by Christina Fincher)

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Alibaba overhauls e-commerce businesses, appoints new CFO

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December 6, 2021

(Reuters) -Alibaba Group Holding Ltd said on Monday it was reorganising its international and domestic e-commerce businesses and would appoint a new chief financial officer.

The changes come as Alibaba faces headwinds on multiple fronts, including increased competition, a slowing economy and a regulatory crackdown.

The e-commerce giant’s Hong Kong-listed shares slid 8% in early morning trade.

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Alibaba said it would form two new units to house its main e-commerce businesses – international digital commerce and China digital commerce, in a bid to become more agile and accelerate growth.

The international digital commerce unit will house Alibaba’s overseas consumer-facing and wholesale businesses, and include AliExpress, Alibaba.com and Lazada. The unit will be headed by Jiang Fan, whose past roles include president of the Taobao and Tmall marketplaces.

Alibaba will house its domestic commerce businesses in the China digital commerce unit which be led by Trudy Dai, a founding member of Alibaba, it said.

The company’s deputy chief financial officer, Toby Xu, will succeed Maggie Wu as the company’s chief financial officer from April, it said, describing his appointment as part of the company’s leadership succession plan.

Xu joined Alibaba from PWC three years ago and was appointed deputy CFO in July 2019.

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Wu, who helped lead three Alibaba-related company public listings as CFO, will continue to serve as an executive director on Alibaba’s board.

Last month the company slashed its forecast for annual revenue growth to its slowest pace since its 2014 stock market debut and saw sales at its banner event, online shopping festival Singles Day, grow at their slowest rate ever.

(Reporting by Akriti Sharma in Bengaluru and Brenda Goh in Shanghai; Editing by Edwina Gibbs)

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China Evergrande shares hit 11-year low after firm says no guarantee it can meet repayments

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December 6, 2021

By Clare Jim

HONG KONG (Reuters) – Shares of China Evergrande Group tumbled 12% to an 11-year low on Monday after the firm said there was no guarantee it would have enough funds to meet debt repayments, prompting Chinese authorities to summon its chairman.

The shares fell as a 30-day grace period on a coupon payment of $82.5 million due on Nov. 6 comes to an end on Monday.

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Evergrande, once China’s top-selling developer, is grappling with more than $300 billion in liabilities. A collapse could send shockwaves through the country’s property sector and beyond.

In a filing late on Friday, Evergrande, the world’s most indebted developer, also said it had received a demand from creditors to pay about $260 million.

That prompted the government of Guangdong province, where the company is based, to summon Evergrande Chairman Hui Ka Yan, and it later said in a statement it would send a working group to the developer at Evergrande’s request to oversee risk management, strengthen internal controls and maintain normal operations.

In a series of apparently coordinated statements late in the evening, China’s central bank, banking and insurance regulator and its securities regulator sought to reassure the market that any risks to the broader property sector could be contained.

Short-term risks caused by a single real estate firm will not undermine market fundraising in the medium and long term, the People’s Bank of China said, adding that housing sales, land purchases and financing “have already returned to normal in China”.

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Evergraned’s stock fell more than 12% to HK$1.98, its lowest since May 2010.

(Reporting by Clare Jim; Editing by Anne Marie Roantree and Christopher Cushing)

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Oil gains more than $1/bbl after Saudi price hike

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December 6, 2021

By Florence Tan

SINGAPORE (Reuters) – Oil prices rose by more than $1 a barrel on Monday after top exporter Saudi Arabia raised prices for its crude sold to Asia and the United States, and as indirect U.S.-Iran talks on reviving a nuclear deal appeared to hit an impasse.

Brent crude futures for February gained $1.69, or 2.4%, to $71.57 a barrel by 0033 GMT while U.S. West Texas Intermediate crude for January were at $67.92 a barrel, up $1.66, or 2.5%.

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On Sunday, Saudi Arabia raised January official selling prices for all crude grades sold to Asia and the United States by up to 80 cents from the previous month.

The price hikes were implemented despite a decision last week by the Organization of the Petroleum Exporting Countries and their allies including Russia, a group known as OPEC+, to continue increasing supplies by 400,000 barrels per day in January.

Prices were also buoyed by diminishing prospects of a rise in Iranian oil exports after indirect U.S.-Iranian talks on saving the 2015 Iran nuclear deal broke off last week. European officials voiced dismay on Friday at sweeping demands by Iran’s new, hardline government. The talks are expected to resume middle of this week.

Both benchmarks rebounded after falling last week for their sixth week in a row for the first time since November 2018 on concerns that the new coronavirus variant Omicron could impact global economic growth and fuel demand.

In another sign of the turmoil unleashed by the ever-changing pandemic, the head of International Monetary Fund said the global lender is likely to lower its global economic growth estimates because of the new variant.

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Omicron has spread to about one-third of U.S. states as of Sunday.

(Reporting by Florence Tan; Editing by Stephen Coates)

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