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Tags: Financial Markets | Infrastructure | Money | Airbus | airline industry

Airbus Sees Jet Demand Conquering Suppliers' Output Fears

jets
JetBlue Airbus jet in airport background. (AP)

Wednesday, 06 October 2021 09:43 AM

Airbus is sticking to its quest for record jet output after airlines reported glimmers of a post-pandemic recovery this week, and believes engine makers who have questioned its most ambitious proposals will be "unable to resist" demand.

Airbus has said it hopes to almost double jet production in a few years as borders reopen. Engine makers fear doing so too quickly could upset their own recovery, by forcing existing jets into retirement rather than their repair shops.

Interviewed at the airline industry's main annual event, Airbus Chief Commercial Officer Christian Scherer held out the prospect that Airbus would play on fierce competition between engine makers as it aims to secure future output of its A320neo.

"There will be engines. That is the beauty of having engine competition in the program," he told Reuters on the sidelines of a meeting of the International Air Transport Association, the first such industry gathering since the pandemic.

"There is a lot of rhetoric ... (but) at the end of the day if customers ... demand more modern airplanes ... no engine maker in the world is going to be able to resist the call of nature. So I’m not concerned about it.”

Airbus is sold out of its A320neo series until 2026, he said.

In May, Airbus issued a mix of firm targets and scenarios that could lift narrowbody A320-family output to 75 jets a month by 2025 from about 40 this year, and 60 pre-COVID.

The head of France's Safran, part of the CFM engine venture with General Electric, said earlier this year he was not sure whether rates above 60 could be sustained.

Also speaking in July, Greg Hayes, CEO of Pratt & Whitney parent Raytheon Technologies, expressed surprise at "pretty aggressive" Airbus output plans.

Both engine makers offer competing engines on the A320neo, the most-sold Airbus jet which competes with the Boeing 737 MAX.

'NO OVERPRODUCTION'

Asked if Airbus had given up on studying the possibility of increasing A320neo output beyond the most recent firm target of 63 a month to 70 or 75, Scherer said: "absolutely not."

He added: "It is a scenario right now. It is not a committed plan. But it is a sizing exercise that we must do because it corresponds to demand – verified demand, not theoretical demand – that we are experiencing, including in meetings we are having right here.”

While IATA discussed tougher climate pledges, airlines, suppliers and leasing companies mingled behind the scenes haunted by the losses and overdue payments left by the industry's worst ever crisis, while reporting some interest in new jets.

Scherer said conversations were beginning to turn towards recovery after a spate of restructurings of plane orders.

"The realization that the world is expecting movement towards more sustainable, more eco-friendly flying is accelerating the need for the most modern airplanes, he said.

Scherer addressed some suppliers' concerns that Airbus would race to build jets to meet that demand, but only temporarily, leaving them to absorb costly capacity if the recovery falters.

"I think recent history has shown Airbus has been able to manage its supply and demand very, very rigorously almost to the dot on the right spot," Scherer said.

"You have to trust that we will continue to do that in the future and not shoot ourselves in the foot by overproducing airplanes that we can’t sell."

© 2021 Thomson/Reuters. All rights reserved.


StreetTalk
Airbus is sticking to its quest for record jet output after airlines reported glimmers of a post-pandemic recovery this week, and believes engine makers who have questioned its most ambitious proposals will be "unable to resist" demand.
Airbus, airline industry
559
2021-43-06
Wednesday, 06 October 2021 09:43 AM
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