Airbus Sees Pressure to Raise Aircraft Production
July 12 2016 - 7:40AM
Dow Jones News
FARNBOROUGH, England—Airbus Group SE sales chief John Leahy said
the plane maker has to increase production to satisfy the flurry of
orders for new jetliners in recent years even though demand for new
planes is slowing.
"The ramp-up is still warranted," Mr. Leahy, chief operating
officer for customers at Airbus's commercial plane unit, said at
the Farnborough air show Tuesday.
A day earlier, Mr. Leahy warned that meeting the company's order
target of around 650 planes would be a "stretch."
Airbus and rival Boeing Co. have announced plans to build ever
more of their most popular planes after years of strong demand that
has seen their backlog balloon for airliners ordered and yet to be
delivered. Airbus's backlog is for more than 6,000 aircraft,
Boeing's tops 5,000.
Airbus has said it plans to build 60 A320 single-aisle planes a
month in 2019, up from the mid-40s today. "We need every one of the
aircraft being built up to rate 60 and even beyond," Mr. Leahy
said. He's also eager for the company to build more A350 long-range
jets to satisfy demand, he said.
Airbus kicked off Tuesday's Farnborough air show order activity
with a deal with Germania. The German carrier will buy 25 A320neo
jetliners and took options for 15 more. The list price value of the
deal, including options, is about $5 billion.
Boeing started the second day of the show with an order for 10
737 Max single-aisle planes and one 787-9 Dreamliner from TUI AG at
a list price value of $1.4 billion. Boeing is raising production of
both models because of strong demand. The Chicago-based plane maker
also said Air Lease Corp. would buy six 737 Max single-aisle planes
at a list price value of $660 million, while Kunming Airlines
agreed to buy 10 737 Max 7 planes at the same value.
Mr. Leahy said the U.K.'s vote last month to exit the European
Union, which has sent the pound down sharply, shouldn't affect the
ability of British carriers to buy Airbus planes. The weak British
currency could spur foreigners to travel to the U.K., he said.
Not all plane segments are selling equally well. Mr. Leahy
acknowledged it has been a challenge to book new orders for the
A380 superjumbo, with Boeing also struggling to sell its 747-8
jumbo jet. Airbus is in talks with several buyers for the
double-decker plane, he said, with the target to secure an order by
year-end.
Airbus earlier this year announced an agreement for a mega-order
of airliners, including 12 A380s, to Iran Air. Plane sanctions on
Iran were lifted on such deals in return for limits on the
country's nuclear program. Mr. Leahy said he was "disappointed" the
U.S. government licenses for the deals haven't been received
yet.
He shrugged off a move by some U.S. lawmakers to block Boeing
and Airbus from selling planes to Iran, though, suggesting the
proposed Congressional language was unlikely to become law.
Write to Robert Wall at robert.wall@wsj.com and Jon Ostrower at
jon.ostrower@wsj.com
(END) Dow Jones Newswires
July 12, 2016 07:25 ET (11:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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