Airbus Studies Higher Output to Follow Boeing in Order Glut
Airbus is exploring higher output of A320 single-aisle and A350 wide-body aircraft, following a similar move by Boeing Co. (BA) to help shorten the wait time for customers following its highest order intake ever last year.
Airbus now builds 42 of its workhorse single-aisle jets a month, and production could rise to 44 or 46 in early 2016, said Tom Williams, Airbus executive vice president for programs. Output of the updated A320neo could rise to about 50 after 2018, and the 10-a-month rate targeted for A350s in 2018 could go to 14 thereafter, the company said.
Airbus and Boeing, the biggest makers of commercial jetliners, have order books stretching out years, making it harder for some customers to upgrade their fleets with more fuel-efficient aircraft like the composite-material A350. Airbus’s net order intake last year was 1,503, topping the 1,355 for Boeing, which kept the crown for the deliveries tally.
“We have some homework to do, but we believe there is potential to go higher,” Airbus Chief Executive Officer Fabrice Bregier said today at the annual press conference in Toulouse, where the planemaker and its parent company are based. “My problem is to find production slots.”
Airbus has sold out A320 production until 2016, with the first re-engined A320neos available from 2019 and A350-900s spoken for through 2021, chief salesman John Leahy said today.
The order intake for 2013 was more than twice what Airbus projected a year ago. Airbus delivered 626 jets, a company record, while trailing Boeing, which handed over 648 airliners. Deliveries at Airbus should be about the same this year and match orders, Bregier said.
Output will increase further in 2015 as A350 production ramps up and again in 2016 if Airbus decides to increase A320 build-rates, Williams said. Boosting output for the A320 that will cease production in early 2018 in favor of the neo is possible because much of the investment for the current type can be re-used on the follow-on, he said.
Airbus is adjusting its narrow-body production to deliver at least 50 percent of the jets as A321s, the largest version, seating about 220, that is increasingly popular. Airbus may trim A330 production around 2016 as more A350s, although Bregier said he doesn’t expect “a sharp drop.”
Airbus may announce a formal decision on production rates when its parent, Airbus Group NV (AIR), reports earnings on Feb. 26, Bregier said. Airbus’s orders last year were dominated by the A320, with 1,253 contracts, including 876 of the new A320neo model. The combined narrow-body backlog stood at 4,296 jets.
Airbus’s reticence until now to increase output has left it vulnerable to losing orders to a rival that can deliver earlier.
“There’s a real interest in accelerating the pace to work down the backlog and provide some hope for potential customers,” said Yan Derocles, an analyst at Oddo Securities in Paris. “Too-long a wait risks throwing contests to Boeing.”
Boeing announced plans last year to boost output of its 737 single-aisle model to 47 in 2017.
With Boeing boosting output of 787 Dreamliners to 14 a month by decade’s end, Airbus is considering keeping pace with its A350, which is now undertaking test flights. Airbus is sticking to its goal of delivering at least one A350 before year-end, according to Bregier.
“The market would easily justify over 14 a month on the A350,” Leahy said.
The A350 wide-body, Airbus’s first new aircraft since the super-jumbo A380 entered service in 2007, is designed to take on Boeing 787 Dreamliner as well as the popular twin-aisle 777. Boeing announced plans last year to offer a bigger 777X to block Airbus’s challenge in large, twin-aisle aircraft.
The Airbus A380 superjumbo suffered another cancellation last year after Airbus dropped India’s Kingfisher Airlines Ltd. (KAIR) from the backlog for five orders, also removing an order for five A350s.
Airbus plans to deliver 30 A380 aircraft in 2014, and aims to win a similar number of orders, Bregier said. A deal with Doric Lease Corp. for 20 super-jumbos could be finalized before April. Airbus has promised to start delivering profitable A380s from 2015, though CEO said it might be a close call.
Airbus’s success so far in keeping the A350 on schedule contributed to last year’s 88 percent increase in the value of the parent company shares. Airbus Group, formerly called European Aeronautic, Defence & Space Co., now has a market of 43 billion euros ($59 billion).
“The risks on the A350 are coming down each day,” Bregier said.
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