CEO Fabrice Bregier likes to be on the safe side. When he talks about the flight tests, he is happy to note that risks are reduced every day. And rather than launching new aircraft programs, he much prefers the low-risk approach of continuous improvement. But given the unexpected order record achieved in 2013, there's one risk he appears willing to take: increasing production.
That increase would encompass the narrowbody models and is likely to be decided over the next few months, possibly by the end of February when parent Airbus Group reports its annual results. The decision would take effect even before the transition from the current version of the Airbusfamily to the (new engine option), which is scheduled to be completed by 2018. “There is an upside potential and we are studying it,” says Bregier.
Airbus's active plans are to complete the transition from the A320ceo (current engine option) to the neo at the current rate of 42 per month. The manufacturer did not opt to go higher than that mainly because engine manufacturers Pratt & Whitney andare already making the transition from one product to another at very high production rates, an effort that has never been tried on this scale. But now that Airbus is in the secure position of having sold the remaining A320ceo production at 42 a month, it is aiming for more.
“I'm pushing for an increase in production,” says John Leahy, chief operating officer for customers. He offers no specifics, but the target is surely below the 47 thatis moving to with its 737 line. Airbus believes Boeing has based its decision on pure speculation and the European manufacturer does not see sufficient market demand to follow suit. Therefore, a move from 42 to around 44 seems to be the most likely.
Despite dealing with steep increases in engine production to support Airbus's original assembly plan, CFM and Pratt seem largely unconcerned by the prospect of an additional rate increase.
Pratt, which plans to deliver the first PW1100Gs to Airbus for flight tests in mid-year, states it is “working very closely with our airframe customers on schedule and configuration alignment. The company is investing hundreds of millions of dollars to position our operations across the globe.” Investments cited include expanding manufacturing space, purchasing new equipment and hiring additional staff for this global expansion.
The engine maker, which has firm orders for 1,630 PW1100Gs for the A320neo line, wrapped up its two-phase, multimillion-dollar upgrade of its Middletown, Conn., facility last September. This included a streamlined assembly operation for theengine that was part of a revision of the plant to free up space for the line. The first phase of the revamp program was completed in February 2013. Pratt's backlog also includes versions of the PW1000G family for Mitsubishi's Regional Jet and 's , the latter of which are now under assembly at a new site in Montreal, as well as units for MS-21 and 's “E2” version of the E-Jet family.
In terms of absolute volume, however, CFM faces a potentially greater challenge as its already record-setting order backlog swells to unprecedented levels due to its 50% share of the neo market and exclusivity on the competingMAX. CFM's current firm backlog on the neo stands at around 1,630 engines, but when combined with firm orders for the Leap-1B-powered 737, already amounts to around 5,180 units.
Prior to the most recent Airbus increase, CFM already planned a substantial ramp-up to meet the demands of the neo and MAX lines. Annual production of the Leap-1A/-1B will rise from zero in early 2015 to around 1,700 engines by late 2018 or early 2019. The Franco-American joint venture betweenand also portends deliveries almost certainly rising to around 1,800 by the end of the decade. All these numbers exceed the recently achieved record maximum annual delivery rate of around 1,500 engines achieved for the . Of the latest move by Airbus, CFM states: “We don't anticipate any problem with the rate increase . . .we have a lot of planning [ahead], but we have the capacity.”
Leahy is even more ambitious when it comes to A320neo production after 2018. He believes a rate of 50 neos would be “easily” doable. “There is demand out there for the product,” he says.
Airbus's drive for a further production increase comes after a record year in terms of new orders and production. It signed 1,619 gross orders—11 more than in the previous record year 2011 and 88 more than Boeing received in 2013. Net orders (1,503) also surpassed the previous high mark. At the beginning of the year, Bregier had set a target of slightly more than 600.
Boeing delivered a record-breaking 648 commercial aircraft in 2013, compared with 601 in 2012, which was the most in a single year since 1999. Net orders for 2013 also climbed to 1,355, compared with 1,203 in 2012 and 805 in 2011. The U.S. manufacturer's commercial backlog stands at a high of 5,080. The number eclipses 2012's backlog of 4,373, which was itself a record number at the time, and primarily reflects the growth in high-volume business for the 737 MAX program as well as the hefty order backlog of the 787 family. The growth in backlog also is highlighted by comparisons with the same figures for 2011 and 2010—3,771 and 3,443, respectively.
Airbus was able to significantly add to its backlog in December. Among others, undisclosed customers placed orders for 120 A320 family aircraft (ceos and neos). Air Asia X bought 25-300s and Emirates took 50 more . In total, it posted 211 firm orders last month.
Airbus also dropped Kingfisher Airlines' orders for five A350-800s and five A380s from the backlog because the airline has been grounded for more than a year and its future looks bleak. Also, 35 A320ceo orders have been converted to the neo—this is counted as both a cancellation and a new order.canceled an order for 12 A319s and A320s.
In the narrowbody market, the A320neo accounted for 876 of the 1,253 orders. Airbus sold 77 A330s, 239 A350s and 50 A380s.
Airbus says it has been “intelligently overbooking” narrowbody production, and is now considering doing the same in the widebody arena. Leahy concedes that overbooking is more difficult with long-haul aircraft because of the long lead times and the high degree of customization.
Airbus delivered a total of 626 aircraft last year, compared to Boeing's 648. Among them were 493 A320-family aircraft, 108 A330s and 25 A380s.
The Emirates order for 50 more A380s, 25 of which are to be delivered between now and 2018, means Airbus can essentially meet its target of delivering around 30 A380s annually over the next three years. This output is key to keeping the program profitable on a recurring cost basis, not counting the billions invested in research and development. Airbus is still finalizing leasing firm Doric's order for 20 A380s, which was announced at last year's Paris air show. The delay is related to Doric's difficulties in arranging financing, but the deal's completion is expected in the first quarter.
The Airbus production increase—if decided—is likely to take effect in 2015.
Bregier says he expects Airbus to deliver around the same number of aircraft this year as it did in 2013. A narrowbody production hike would not be felt until next year at the earliest. Also, A350 production will be ramped up, slowly at first, beginning in 2015, following the delivery of the first aircraft in fourth-quarter 2014 (to). The aim is to produce 10 A350s per month—four years after entry into service—by the end of 2018. But Leahy says, “The market would easily justify a rate of 14.”
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