Airbus to Resist Matching Boeing’s Single-Aisle Production Surge

Airbus Group NV said it will resist boosting output of single-aisle A320 jets beyond levels already planned even as Boeing Co. mulls a jump in build rates.

With A320 construction slated to reach 46 a month by mid-2016 from 42 now, with an intermediate increase to 44 early the same year, Airbus wants to avoid hitches with suppliers and production of surplus aircraft, John Leahy, the planemaker’s chief salesman, said today in Istanbul. Boeing said last week that rates for the rival 737 model could reach 52 a month, compared with 42 at present and the 47 already planned for 2017.

“What worries me is this whole Field of Dreams concept: ‘build it and they will come,’” Leahy said at the ISTAT Europe aviation industry conference. Airbus is wary of major rate hikes that can “create havoc in the manufacturing process,” especially in light of European rules about laying off workers during slower production periods, Leahy said.

Airbus and Boeing are rushing to fill demand for planes that provide vital feeder flights for network airlines and are the mainstay of operations at low-cost specialists. A further impetus for orders has been provided by the European company’s re-engined, more efficient A320neo, due for delivery late 2015 into 2016, and Boeing’s Max version of the 737 available 2017.

Airbus has a 60 percent share of the order backlog for the revamped models, though the balance is closer to 50:50 taking into account only those contests after Boeing had committed to upgrading the 737, Randy Tinseth, the U.S. company’s commercial marketing chief, said in an interview at the ISTAT event.

‘Measured Approach’

“When we do rate decisions we take a very thoughtful view and a measured approach,” he said. “We have worked very hard to ensure that demand for these planes is real. And we make rate decisions on the assumption that we’ll continue producing at those rates for a significant period of time.”

In a poll conducted during a session at the ISTAT conference, 38 percent of respondents said the industry might be headed toward overproduction by 2018. Leahy said the a320neo will eventually improve on efficiency metrics, with 20 percent better economics by 2020 over current models, compared with the 15 percent gain advertised for the first neos.

Leahy said that airlines sometimes order more single-aisle planes than they need, and that future market share targets of carriers competing for the same traffic are often incompatible.

“Three airlines tell us they’re going to improve their market share by 10 to 15 percent,” he said. “But someone’s going to be very successful, someone very unsuccessful and someone is in the middle. So two or three don’t need all the planes they ordered. You have to be very careful.”

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