* Almost two-fold rise in single-aisle output by mid decade
* Targets 45 A320neos a month by end 2021, 64 by mid 2023
* Shares jump almost 7%, boosting sector
(Adds details, quotes)
By Tim Hepher
PARIS, May 27 (Reuters) - Europe's Airbus set out
sweeping goals on Thursday to expand production of jetliners,
pushing shares up across the industry as it charts a recovery
from the coronavirus crisis and prepares for negotiations with
suppliers about investment plans.
The world's largest planemaker is exploring an almost
two-fold increase in output of best-selling single-aisle jets by
the middle of the decade from current crisis-depressed levels,
and has finalised its output plans for the rest of this year.
"The aviation sector is beginning to recover from the
COVID-19 crisis," Chief Executive Guillaume Faury said in a
statement.
Airbus confirmed plans to increase single-aisle A320neo
production by more than 10% from a current rate of 40 airplanes
a month to 45 a month by the end of this year.
It gave suppliers a firm new target of 64 a month by the
second quarter of 2023 - topping its previous record of 60 a
month and above pre-crisis ambitions of hitting 63.
Shares in Airbus rose as much as 6.8%, soaring back above
100 euros to within a whisker of their 52-week high of 104.54
euros after its projections, which used carefully calibrated
language ranging from firm plans to long-term scenarios.
Demand for single-aisle jets is recovering as domestic
travel rebounds, especially in the United States and China.
In anticipation of a continued recovery, Airbus is asking
its suppliers to "enable a scenario" where it can produce 70
single-aisle jets a month by the first quarter of 2024.
"Longer term, Airbus is investigating opportunities for
rates as high as 75 (a month) by 2025," it said.
Airbus also gave a firm target of increasing production of
the small A220 from five a month to six a month in early 2022
and said it was envisaging monthly output of 14 for the same
model by the middle of the decade.
'PUNCHY' PLANS
The planemaker said production of the wide-bodied A350 was
expected to rise from an average of five a month now to six by
the autumn of 2022. Long-haul travel on jets like these is
expected to be slowest to recover.
Only the wide-bodied A330 family is excluded from the higher
production ambitions and will stay at two a month, Airbus said.
Analysts at Jefferies described the move by Boeing's
European rival as "punchy production plans," while Barclays
Capital said it was ahead of expectations.
Shares in suppliers rose, with engine maker Safran
among the biggest beneficiaries of an Airbus-led rally in Paris.
But some of the company's network of 8,000 suppliers were
privately less optimistic.
The production ramp-up has already led to a stand-off
between some suppliers and Airbus over who should bear the risk
of investments needed to lift the industry out of the crisis.
"The supply chain doesn't yet see the signs" of the type of
recovery laid out by Airbus in single-aisle jets, a senior
industry source told Reuters.
Asked about the proposed increase in A350 output, the source
said. "It's a long way off".
The new roadmap comes after Reuters reported that Airbus had
ordered suppliers to demonstrate as soon as possible that they
are factory fit for increased single-aisle jet output, while
voicing concerns over industrial quality problems.
"Airbus has clearly decided it needs to stress-test its
suppliers, and check that they actually can (and will) deliver
to higher rates," Agency Partners Sash Tusa wrote.
(Reporting by Tim Hepher; Additional reporting by Piotr
Lipinski; Editing by Muralikumar Anantharaman and Mark Potter)
Barclays (BARC)
