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Aircraft Manufacturers Jostle for African Market



  • Aircraft Manufacturers Jostle for African Market

Major aircraft manufacturers – Boeing, Airbus, Bombardier, Embraer, ATR and others – are in fierce competition to have their aircraft types dominate the fleet of Nigerian and other African carriers, investigations have revealed.

The push for the dominance is coming on the heels of market survey studies, which revealed Africa as the new frontier market for the growth of global air transport.

Boeing, Airbus, Embraer and Bombardier’s surveys indicate the demand for their aircraft types in Africa as the next destination for growth.

Besides the reports, many African countries, including Nigeria, have opened discussions with some aircraft manufacturers to acquire their aircraft for either their national or flag carriers.

Investigations revealed that many African governments are about sealing their aircraft acquisition deals with Boeing Corporation, Airbus Company, Bombardier Commercial Aircraft Company and Brazilian aircraft maker – Embaer.

To confirm its interest in Nigeria as well as West and Central Africa, Boeing Corporation last year signed an agreement with Spring Fountain Infrastructure Limited to set up an aircraft company to facilitate airplane acquisition for carriers.

Part of the move, investigations revealed, was to encourage Nigerian and other African carriers to replace their ageing aircraft with state-of-the-art Boeing equipment that are environment-friendly and fuel efficient.

According to the project’s promoter, Mrs Tokunbo Fagbemi, this would boost Boeing Corporation’s inroads into Africa.

This move lauded by many operators, including Chairman of Air Peace, Mr Allen Onyema, has seen the airline acquiring more aircraft.

Though Boeing aircraft consists of over 60 per cent of the fleet in the airspace by indigenous carriers, others exist.

Air Peace, for instance, has acquired some Embraer jets. The aircraft, experts say, are good for short haul flights.

It was learnt that the Brazilian aircraft manufacturer is making inroads into the Nigerian and African markets as more operators are embracing the fleet because of its fuel economy, limited crew and lower maintenance cost.

In a recent interview in Lagos, Tropical cal Arctic Logistics Limited (TAL) President and Chief Executive Officer, Emperor Baywood Ibe, advised operators to consider Embaear regional and business jets as the most suitable aircraft for short haul flights.

The helicopter operator, who plans to launch scheduled domestic flights soon, said the company will settle for Embraer jets.

Also, in a recent interview, Minister of State, Aviation, Hadi Sirika confirmed that the government was discussing with some aircraft manufacturers to acquire airplanes for the proposed national carrier – Nigeria Air.

Investigations reveal that besides Boeing and Embraer aircraft types, many Nigetian carriers, including Arik Air, Aero Airlines and Overland Airways, have many Bombardier and ATR aircraft in their fleet.

While Overland Airways has ATR 72 aircraft type in its fleet, Aero and Arik Air have some Bombardier CRJ and Dash 8 Bombardier jets in their fleet.

Meanwhile, Canadian airplane manufacturer, Bombardier Commercial Aircraft, said three of it turboprops has been acquired by a Ghanaian operator – Passion Air.

The airline has become the first Bombardier operator in Ghana.

The aircraft manufacturer said the company placed three pre-owned Q400 turboprops.

The airline acquired the aircraft through a dry-lease with a third party.

“Bombardier has sold about 3,500 new regional aircraft to date, and we continue to be very active on the used aircraft market,” said David Speirs, Vice President, Asset Management, Bombardier Commercial Aircraft.

“Our recent momentum on the pre-owned aircraft market worldwide is a clear indication that our products are addressing a growing need for regional air transportation, especially in emerging markets.

“Our market penetration in Africa continues to intensify, and we are pleased to welcome Passion Air as the first commercial airline operating a Bombardier regional aircraft in the Republic of Ghana,” said Jean-Paul Boutibou, Vice President, Sales, Middle East and Africa, Bombardier Commercial Aircraft.

“Africa is the youngest and fastest growing region in the world, and regional aircraft like the Q400 will play a key role in helping advancing Africa’s economic growth.

The airline will operate the three Q400 aircraft in a 78-seat configuration on domestic routes.

“This is a first step, and we look forward to expanding our fleet with more Bombardier aircraft,” said Edward Annan, Chief Executive Officer, PassionAir.

Only last month, Bombardier Commercial Aircraft announced that it has signed a firm order for four new CRJ900 regional jets with Uganda National Airlines Company.

Based on the list price for the CRJ900 aircraft, the firm order is valued at $190 million.

“We congratulate the Government of Uganda on the revival of its national flag carrier, and are thrilled that the new airline has selected Bombardier and the CRJ900 regional jets for its upcoming debut,” said Jean-Paul Boutibou, Vice President, Sales, Middle-East and Africa, Bombardier Commercial Aircraft.

Investigations reveal that 21 operators are flying 58 CRJ Series in Africa. Bombardier has recorded firm orders for 1957 CRJ Series regional jets.

A recent batch of acquisitions by African carriers boosted Bombardier’s presence on the continent.

“As we seek to increase our market share on the continent, we have successfully placed a significant number of pre-owned regional aircraft with more than seven airlines from the region in the last three months,” Boutibou said.

Among African carriers that have acquired Bombardier aircraft are South Africa’s CemAir, Tunisian Syphax, Cameroon’s CamAir – Company, Kenya’s DAC East Africa and Congo Airways.

Others are: Kenya’s 784 Air Services and Silverstone Airways.

“Our market penetration in Africa is making headway,” Boutibou said at the African Aviation Finance conference in Johannesburg, South Africa

“Our strategy not only further supports our aftermarket revenue stream, we are confident that it will also lead to new aircraft orders in the future,” he added.

“These latest placements in Africa are testament to the residual value of our regional aircraft,” Bombardier Commercial Aircraft Vice President, Asset Management, David Speirs said

Africa’s fast growing carrier, Ethiopian Airlines, has signed a purchase agreement with Bombardier for 10 new Q400 aircraft.

“The Bombardier turboprops continue to deliver unmatched performance to our operators, and we are proud that the flag carrier of Ethiopia is once again recognising its tremendous value by increasing its fleet of Q400 aircraft,” said Fred Cromer, President, and Bombardier Commercial Aircraft.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya

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Crude Oil Rises to $43.68 on Monday Despite Concerns Over Rising COVID-19 Cases



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Oil Rises to $43.68  Despite Concerns Over Rising COVID-19 Cases

Oil prices rose on Monday during the London trading session to $43.68 per barrel despite growing concerns over the rising number of new COVID-19 cases.

The Brent Crude oil, against which Nigerian crude oil is measured, rose as high as $43.68 per barrel before slightly pulling back to $43.24 per barrel as at 1:25 pm Nigerian time.

UKOilDaily 1The US West Texas Intermediate crude oil remained largely unchanged as it traded at $40.64 per barrel on Monday. The same price range it traded last week.

Despite the rising number of COVID-19 new cases in the US and the rest of the world, Brent crude oil has been able to sustain the recent upsurge on the back of OPEC and allies 9.7 million per day production cut agreement and the reported improvement in compliance level.

However, experts have said if the number of confirmed COVID-19 cases continues to increase that demand for the commodity will decline as people and businesses would be forced to shut down operations and stay at home.

“There will be some kind of decline in demand if cases were to increase as people will stay at home,” said Howie Lee, an economist at Singapore’s OCBC Bank. “The pace of U.S. demand recovery will not be as steep as expected.”

Analysts at ING bank said in a note that the report of the Energy Information Administration due later this week will highlight the impact of the new restriction due to the second wave of COVID-19 on gasoline demand.

“We will get a better idea of what impact tighter restrictions in several states have had on gasoline demand with the EIA (Energy Information Administration) report this week.”

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Citigroup Sees $60 Per Barrel Crude Oil in the Next 12 Months



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Citigroup Says Crude Oil Will Reach $60 Per Barrel in a year

Despite the current economic downturn and the projected second phase of COVID-19, Citigroup, a New-York based financial service company, has said oil price could hit $60 per barrel in the next 12 months.

Citigroup disclosed this on Thursday during a virtual EMEA Media Summit titled – ‘Navigating the Future: What’s Next in a Post-COVID-19 World’.

“After a substantial underperformance in the last six months relative to several other commodities, crude will eventually bounce back to around $60 per barrel over the next 12 months,” Max Layton, European Head of Commodities Strategy, Citigroup said while giving a presentation on the outlook for commodities in the second half of 2020, and into 2021.

This means Brent crude oil would rise by at least 50 percent from the current level of $42 per barrel in the next 12 months.

“It’s going to be a function of the demand and supply but recently we have been seeing a spike in the demand for some of the commodities,” said Atiq Rehman, Head of EMEA Emerging Markets, Citigroup.

“A lot of these economies are heavily commodity-dependent, and perhaps, in the past have been guilty of not diversifying when they come under pressure. I think perhaps, this recent moves will push them to diversify away from simply commodities,” Grant Carson, Head of TRUK And Non-Presence Countries, Citigroup, stated citing Russian as one of the countries that have recorded success in diversifying away from crude oil.

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Oil Sustains $42 Price Level as OPEC Output Drops to Over Two-Decade Low



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OPEC Oil Output Drops to Over Two-Decade Low in June

Crude oil sustained $42 per barrel price level following a recent survey conducted by Reuters that showed the Organisation for the Petroleum Exporting Countries (OPEC) managed to cut oil production to over two-decade low in the month of June.

According to the survey, OPEC’s 13 members pumped 22.62 million barrels per day in June, 1.92 million barrels per day below May’s revised figure. The lowest since May 1991.

OPEC and allies, together referred to as OPEC plus, had agreed to cut oil production by 9.7 million barrels per day in the month of April to rebalance the global oil market and prop up prices amid COVID-19 pandemic.

OPEC’s share of the 9.7 million barrels per day production cut was 6.084 million bpd but OPEC delivered 6.523 million bpd cut in the month of June despite the inconsistencies from Nigeria, Angola and Iraq.

In June, Saudi Arabia reduced production by 1.13 million barrels per day to 7.53 million bpd. While Kuwait and the United Arab Emirates met their quota but struggle to fulfill the extra cuts.

Nigeria, Iraq and Angola continue to struggle in the month of June. However, their performance improved compared to May as Nigeria attained 77 percent compliance level, up from 19 percent in May.

While Iraq and Angola achieved 70 percent and 80 percent compliance level, respectively. Nigeria and Iraq have pledged to cut more in July despite their economic challenges. Angola, however, said it would not be able to cut extra oil production until October.

Brent crude oil, against which Nigerian oil is measured, rose to $42.48 per barrel on Friday as at 2:58 pm Nigerian time.


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