BA Boeing Co

(Updates with background.)

 
   By Robert Wall 
 

DUBLIN--Airbus SE (AIR.FR) on Monday said it has won an order for 65 single-aisle planes, signaling continued pressure to boost output of its popular narrowbody planes despite growth concerns because of global trade tensions and economic slowdowns in two of the biggest jetliner markets, China and India.

Airliner-leasing company SMBC Aviation Capital Ltd. said it would buy a mix of A320neo and A321neo planes valued at more than $7 billion before industry-standard discounts.

SMBC Chief Executive Peter Barrett, already a A320neo customer, said airline demand for those planes remains healthy.

"We see good demand for them for the medium- to long-term," he said.

SMBC is already signing rental agreements with airlines for A320neo planes not due to be delivered by Airbus until 2021. Plane deliveries under the new orders are set to take place between 2023 and 2025, the lessor said.

A slowdown in economic growth rates in India and China has raised concerns as to whether the until now consistent demand for more planes in both markets may finally be starting to ease. Mr. Barrett said SMBC is currently pursuing several lease deals with Chinese customers.

Airbus said the pressure to produce more planes may be less intense than it was several months ago, but the European plane maker's chief salesman, Christian Scherer, stressed that "the pressure is still there."

Mr. Scherer said Airbus sees potential to boost production and to extract stronger pricing.

"We can pick our battles," he said.

Airbus and larger rival Boeing Co. (BA) closed 2018 with stronger-than-expected order intake. Boeing logged 893 new orders to beat Airbus with 747 orders. Both of the companies' most popular planes are sold out for years in advance and though last year both produced a record number of airliners, this year's outputs should be even higher.

Boeing and Airbus executives have said the plane makers may be need to boost narrowbody production even further than already planned. Airbus this year has promised to build 60 of its A320s a month, while Boeing has said it will produce 57 units a month of its 737.

Guillaume Faury, who runs Airbus's commercial plane business and is due to become chief executive in April, said the company may not decide on whether to boost production rates until later this year, or the next.

Building the narrowbody planes has been a headache for both Boeing and Airbus as suppliers have struggled to keep pace. In some cases airlines have faced delayed plane deliveries as a result. Mr. Barrett said his message to plane makers is "let's focus on the quality of delivery and quality of the product" rather than higher output.

Airbus isn't just wrestling with the decision on whether to boost production, but also tackling relatively low widebody orders last year.

The Toulouse, France-based plane maker secured only 99 widebody deals last year. Boeing secured 200 orders in that category, which typically delivers higher margins.

Mr. Scherer blamed some of the market-share discrepancy on the aggressive pricing Boeing offered, but also acknowledged that Airbus needs to step up its efforts.

"In this space we will want to be better and not bitter," he said.

Write to Robert Wall at robert.wall@wsj.com

(END) Dow Jones Newswires

January 21, 2019 08:14 ET (13:14 GMT)

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