Airbus mulls raising output of A320 jets as demand soars

Bloomberg

Airbus SE is considering increasing production rates for its best-selling single-aisle A320 jetliners, as airlines around the world place orders for hundreds of planes to meet surging demand for air travel.
“The success of the products is forcing us to look at any opportunities we can have to improve the rate,” Eric Schulz, Airbus’s new sales chief, told reporters at the Singapore Airshow. “We have not come to any conclusion yet. But this is something we are looking at very, very closely.”
Airlines, particularly in Asia, are scrambling to secure aircraft to support the rapid expansion in emerging markets including China and India, where more and more people are taking to the skies for the first time.
The demand has boosted orders for both Airbus’s A320 family of single aisles as well as Boeing Co.’s 737— models that form the backbone for short-haul travel.
Airbus said previously it aims to produce 60 A320s a month by mid-2019, up from an average of 50 in the first quarter of 2017, across production lines in Toulouse, Hamburg and Mobile, Alabama, as well as China. Outgoing Chief Operating Officer Fabrice Bregier indicated in January that there is enough demand for Airbus to be producing as many as 70 of the aircraft a month, adding that any decision would be left to his successor.

OUTPUT HURDLES
Production hurdles that have hindered deliveries of engines for both Airbus and Boeing narrowbodies have leveled out in recent months, with Schulz saying he was “confident” that the European manufacturer’s supply chain would be able to cope with a higher target. CFM, a joint venture between General Electric Co. and Safran SA, said in January it had been approached by each planemaker about reaching a rate of 70 planes a month.
Tight aircraft availability are already hindering deals, including for a possible order of 50 narrowbodies from India’s Vistara, people familiar with the matter said. The airline may have to agree to leasing some aircraft to bridge the time until it can get new jets off Airbus’s production line.
Boeing’s 737 Max is available for delivery only after 2020, the company’s senior vice president for sales in Asia and India, Dinesh Keskar said in an interview. The company has already indicated that rates on its narrowbodies will reach 57 jets a month this year.
Asia Pacific is likely to have 3.5 billion airline passengers by 2036, adding more than double the forecast for North America and Europe combined, according to estimates by the International Air Transport Association.
Airbus’s Schulz was making his first appearance as sales chief, succeeding industry legend John Leahy who secured aircraft orders worth more than a trillion dollars during his decades long tenure. Leahy has said he intends to stay on at Airbus to help with the transition.