Daily Management Review

Airbus Ramps Up Target For Jet Output While Betting On Aviation Recovery


Airbus Ramps Up Target For Jet Output While Betting On Aviation Recovery
Its production targets were increased by the European airplane maker Airbus on Thursday, reflecting signals of a global recovery and strengthening its position prior to a meeting with its suppliers about how to share investments that will be needed to take the aviation sector out of its pandemic slump.
Following its announcement of it was considering increasing its output by almost two-folds for its key single-aisle jets by the middle of the decade compared to the supressed levels during the pandemic as well as that of firming up 2021 output plans, there was a more than 6 per cent rise in the stock price of the world’s largest plane maker.
“The aviation sector is beginning to recover from the COVID-19 crisis,” Chief Executive Guillaume Faury said in a statement.
The plane maker also announced a more than 10 per cent increase in the output of its single-aisle A320neo from the current rate of 40 airplanes a month to 45 a month by the end of this year.
The company also set a target of making 64 such planes a month by the second quarter of 2023 which was more than its previous production record of 60 planes a month while improving on its pre-crisis ambitions of 63 planes a month.
 The drumbeat for the global aerospace industry was set by the production targets of the workhorse single-aisle airplanes and is closely tied to medium-haul traffic that tends to track the wider economy.
There is a faster than expected revival of demand for the jets driven by growth in domestic travel in the United States and China.
However it can be a challenge for Airbus in persuading suppliers to ramp up investments for plans that may not be completely successful, said industry sources.
It was requesting its suppliers to “enable a scenario” in which it would be possible to make single-aisle jets a month by the first quarter of 2024, the plane maker said. “Longer term, Airbus is investigating opportunities for rates as high as 75 (a month) by 2025,” it added.
There were reports previously about airbus asking its suppliers to show as soon as possible that they were factory fit for a ramp up in the production of the single-aisle jet while also raising a concerns for industrial quality problems.
There were also reports about Airbus’s rival Boeing holding discussions for a fresh push to increase output of its 737 Max planes to reach as many as 42 planes a month by the autumn of 2022 to help in shaking off overlapping safety and Covid-19 crises.
Airbus also said that the output of the wide-bodied A350 was expected to rise from an average of five a month now to six by the autumn of 2022.
The move was described as “punchy production plans” by analysts at Jefferies while Barclays Capital said it was ahead of expectations.
Disagreements about the responsibility of bearing the burden of making investments for lifting the industry out of the crisis has led to a stand-off between some suppliers and Airbus even while the plane maker is trying to ramp up production.,
“The supply chain doesn’t yet see the signs” of the type of recovery laid out by Airbus in single-aisle jets, a senior industry source was quoted in the media as saying.