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Bloomberg
Airbus Group SE announced plans to lift output of the aging A330 jet and predicted higher annual deliveries, indicating its confidence weeks after US rival Boeing Co. shocked investors by flagging a drop in output.
The European planemaker said it will restore A330 production to seven a month in 2017, suggesting it has come to terms with a demand dip that followed the announcement of a re-engined version due at the end of that year.
Airbus aims to hand over more than 650 jets in 2016, up from 635 in 2015, with output of the latest A350 wide-body more than tripling to 50 jets. Boeing, by contrast, said on January 27 that deliveries could drop by 22 from last year’s record tally of 762, sending the stock to its steepest drop since October 2001.
“We’re handling it so far,†Airbus Chief Executive Officer Tom Enders said in an interview of the ramp up, which includes the A320neo narrow-body that began deliveries last month. “On the A330, I think we were prudent to take an early decision to bring the rates down, but we have always said we’re flexible, and if we saw stronger demand, to go up again.â€
Engine Glitch
Airbus, which gets two-thirds of revenue from its airliner unit, is embarking on one of the biggest output increases in its history after winning thousands of orders for fuel-efficient jets before the oil price fell. A320 production is set to reach 60 a month by mid-2019, aided by Airbus’s first U.S. assembly line, though deliveries of the Neo version will be “back-loaded†this year as engine supplier Pratt & Whitney grapples with an over-heating issue.
“The demand is there,†Enders said in an interview. “We still have over-bookings even when we talk about rate-60. On the A350, we had a relatively slow ramp-up in 2015, being prudent about the problems and teething issues you have on any new program, but in 2016 we have to double, triple production or more.â€
Profit Edges Up
Airbus’s earnings before interest and tax rose 1.6 percent to 4.13 billion euros ($4.6 billion) in 2015 as A350 deliveries reached 14 in the program’s first full year and the company broke even for the first time on the A380 superjumbo. Both cash flow and Ebit are forecast to be “stable†this year.
“That may not be terribly exciting, but the last thing we need is excitement at this critical juncture,†Sandy Morris, an aerospace analyst at Jefferies International.