Airbus Expects to Hold Down Airplane Production Until 2022 -- WSJ
July 31 2020 - 3:02AM
Dow Jones News
By Benjamin Katz
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 31, 2020).
Airbus SE, reeling from the fallout from the coronavirus
pandemic, said it doesn't expect to start increasing aircraft
production again until around 2022 as the crisis hitting the
aviation sector deepens.
The European plane maker, which cut its production rates by a
third in April, said Thursday it would again reduce the output of
its A350 wide-body from six aircraft a month to five. It also
reported a net loss of EUR1.9 billion ($2.24 billion) in the first
half, down from a profit of EUR1.2 billion a year earlier.
Chief Executive Guillaume Faury said he expects production rates
for the company's popular single aisle, the A320neo, the rival to
Boeing Co.'s 737 MAX, to recover first, helped by an expected
recovery in short-haul and domestic travel.
Work on bigger aircraft used on longer international routes is
set to remain depressed for longer, he said.
The outlook for the industry has deteriorated in the last three
months, he said, with the industry on a "long and slow recovery"
path. The company said it was trying to hold on to cash in the
second half of the year after burning through EUR4.4 billion in
each of the first two quarters. Including its record-breaking
settlement of bribery and corruption allegations in January, the
company posted a negative free cash flow of EUR12.4 billion in the
half.
Cash has been hit by a flurry of order deferrals by its
customers, leaving Airbus with about 145 aircraft parked and
awaiting delivery. Airbus has handed over 196 jets as of the end of
June, about half of the number delivered at the same point last
year.
Airbus' earnings and production outlook comes a day after Boeing
laid out plans to navigate through the pandemic with additional
cuts to production, including delaying its production plans for the
MAX and further reducing the output of its 787 and 777
wide-bodies.
Mr. Faury said Airbus was keeping a close eye on its 3,200
suppliers, establishing "watchtowers" to monitor the weakest. So
far, the supply chain is coping, but he warned that a "big second
wave" of infections in winter would make the situation more
critical.
Write to Benjamin Katz at ben.katz@wsj.com
(END) Dow Jones Newswires
July 31, 2020 02:47 ET (06:47 GMT)
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