Airbus Cuts Commercial Aircraft Production By One Third
FRANKFURT—Airbus decided April 8 to cut commercial aircraft production by roughly one third across the board as it deals with the fall-out of the coronavirus crisis.
The aircraft manufacturer plans to produce 40 A320neo family per month on average, down from a previous near-term target of 63. Airbus will also reduce A330/A330neo output to two aircraft per month from the pre-crisis production level of 40 per year. A350 deliveries are reduced from between nine and ten aircraft to just six per month.
Airbus said it “preserves its ability to meet customer demand while protecting its ability to further adapt as the global market evolves.” CEO Guillaume Faury pointed out that it is “not unlikely” that the new rates could go back up in 2021 as the situation improves but that it was too early to make firm commitments. The decisions made now reflect the “best knowledge” today and “many conversations with airline CEOs and COOs.”
“The impact of this pandemic is unprecedented,” Faury said. “We are in constant dialogue with our customers and supply chain partners as we are all going through these difficult times together. Our airline customers are heavily impacted by the COVID-19 crisis. We are actively adapting our production to their new situation and working on operational and financial mitigation measures to face reality.”
Airbus delivered 122 aircraft in the first quarter, 36 of which were in March. They included two A220s, 19 A320neos, one A321ceo, ten A321neos, one A330-200 and three A350s according to the company’s latest orders and deliveries figures. Airbus produced 60 more aircraft that were not delivered in the quarter because of the COVID-19 impact.
The production reduction will be implemented over the coming weeks and Faury believes that “this crisis will probably be a long one. Our industry is one of the most impacted.” The production rates are “the result of the best matching between the downturn and the remaining commitments. We needed to have a plan. We will review it probably on a monthly basis and I don’t know whether it will be modified.” There was still “uncertainty moving forward.”
The A330 will remain a profitable program, Faury said, but the A350 will face “more headwinds” having just moved into profitability in 2019.
According to Faury, the production cuts are to be made across all of its final assembly lines and no single site will be shut down. “It will be a dynamic situation and we will be flexible.” It is “not unlikely that aviation will look different after this crisis.” But having good products makes Faury stay “optimistic.” Efforts for long-term technology such as more electric flying will “slow down, but we will keep investing in the technology of the future.”
Airbus is removing all costs that are not “absolutely necessary” as the business is shrinking significantly. However, development programs such as the A321XLR that Airbus has committed to will not be touched and timelines not changed.
The manufacturer recorded 290 net orders in the first quarter. There were two new orders in March: AerCap bought 25 A320neos and 25 A321neos, and an undisclosed customer ordered ten A350-900s. The first quarter was “unusually strong” in terms of new orders, Faury said. But now “the situation has changed completely” and Airbus expects “a much lower level of orders for the coming months.” There are a lot of requests for deferrals of deliveries in 2020 and even in 2021, Faury said. Therefore, Airbus has decided to not produce them in the first place.