Airbus backs jet output target amid supplier concerns

Airbus backs jet output target amid supplier concerns

2/2 © Reuters. FILE PHOTO: The nose of an Airbus A380 is seen outside the factory of Stelia Aerospace in Meaulte © Reuters. FILE PHOTO: The nose of an Airbus A380 is seen outside the factory of Stelia Aerospace in Meaulte 2/2

By Tim Hepher

PARIS (Reuters) – Airbus stuck to ambitions for a partial recovery in jet production later this year, amid speculation that it may have to delay the move as Europe faces new coronavirus lockdowns.

Airbus has said it wants to be in shape to raise benchmark A320-family output by 18% to 47 jets a month by July, but the goal has already slipped to the fourth quarter, according to analysts, with some saying it could slip further.

"It looks like the rate of 47 is slipping to the right," said one supply chain source.

Another supplier said the rate was beyond reach for 2021.

Airbus was producing 60 of the jets a month before the spread of COVID-19 grounded airline fleets earlier this year.

Asked about the output plans at a news conference on annual deliveries, Chief Executive Guillaume Faury said current plans pointed to an increase in the second half of the year, but noted "a lot of uncertainties" because of the coronavirus crisis.

Chief Operating Officer Michael Schoellhorn last month told the Hamburger Abendblatt newspaper that output "could … rise a little later or flatter" than previously anticipated.

An Airbus spokesman said no decision had been made.

Airbus plans a virtual briefing with the heads of some its major suppliers in coming days in a move expected to set the manufacturing tone for the coming year, industry sources said.

It is involved in a stand-off with some suppliers who want guaranteed or upfront payments for parts to support any output increase, in case volatile demand falls again. Those companies are in turn receiving similar demands from their own suppliers.

That is making it harder for Airbus to confirm the timing of an increase, sources said, though it is focusing for now on maintaining the flexibility to act whenever needed.

FINANCIAL PRESSURE

Delaying the planned increase in production to 47 aircraft a month would prolong financial pressure just as Airbus is struggling to reach targets for job reductions, especially at its headquarters in France and in German plants, sources said.

Airbus has extended a deadline for voluntary redundancies as part of a restructuring plan affecting up to 15,000 jobs.

Faury is expected to force significant cuts among executive posts as part of the biggest restructuring in the company's history as it contends with a coronavirus slump in air travel.

The French CEO on Friday said that the restructuring was "making progress, on track".

Despite renewed lockdowns in Europe, Airbus confirmed its position as the world's largest planemaker with stronger than expected deliveries of 566 jets last year.

Original Article

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