Airbus fixes higher jet production targets as aviation recovers

By Ashika Rajan, Trainee Reporter
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The European planemaker Airbus has increased its jet production targets, backing signs of global recovery and bolstering its position ahead of talks with suppliers about how to share the necessary investments to lift aviation out of its pandemic doldrums.

Shares in the world’s largest planemaker rose more than 6 percent after the company said it was looking into nearly doubling the output of key single-aisle jets by the middle of the decade, compared to crisis-era lows, while also firming up 2021 output plans.

Mr. Guillaume Faury Chief Executive Officer Airbus remarked that “the aviation sector is beginning to recover from the COVID-19 crisis.”

Airbus has confirmed plans to expand manufacturing of the single-aisle A320neo by more than 10 percent, from 40 to 45 jets per month by the end of the year.

It set a solid new target for suppliers of 64 per month by the second quarter of 2023, surpassing its previous production record of 60 per month and beyond its pre-crisis goals of 63.

Shares in Airbus soared as much as 6.8 percent, leaping back above $121.9 to within a whisker of its 52-week high of $127.5 after its estimates, which utilized carefully calibrated wording ranging from firm plans to long-term scenarios.

The global aerospace industry’s flow is set by the production of workhorse single-aisle planes, which is closely linked to medium-haul traffic, which tends to mirror the wider economy.

Domestic travel in the US and China is boosting demand for planes faster than projected.

According to industry sources, Airbus may face a battle to persuade suppliers to increase investments in plans that may or may not come to fruition.

The planemaker said that it was asking suppliers to “enable a scenario” where it can produce 70 single-aisle jets a month by the first quarter of 2024.

“Longer term, Airbus is investigating opportunities for rates as high as 75 (a month) by 2025,” the planemaker added.

It also comes less than a week after industry sources revealed Boeing was considering a new push to increase 737 MAX production to as many as 42 planes per month by autumn 2022, to help resolve the overlapping safety and COVID-19 crises.

Airbus announced a firm target of increasing production of the small A220 from five to six per month in early 2022, as part of the rest of its portfolio. It also stated that by the middle of the decade, it envisaging monthly output of 14 for the same model.

Wary Suppliers

The A350’s production rate is expected to increase from five per month now to six by the autumn of 2022, according to the planemaker. Long-haul travel on planes such as these is expected to be the most difficult to recover.

Shares in suppliers increased, with Safran, the engine maker, benefiting the most from an Airbus-led rally in Paris.

Some of the company’s 8,000 suppliers, on the other hand, were privately optimistic.

As per the sources, “the supply chain doesn’t yet see the signs” of the type of recovery laid out by Airbus in single-aisle jets.

When asked about the proposed increase in A350 output, the source added: “It’s a long way off.”

Airbus took steps to reassure suppliers by scheduling a series of rushed talks on the plans.

Agency Partners analyst Mr. Tusa commented that “Airbus has clearly decided it needs to stress-test its suppliers and check that they actually can and will deliver to higher rates.”

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