(Adds analyst quote)
By Tim Hepher
PARIS, Oct 22 (Reuters) - Airbus has asked
suppliers to be ready to support a conditional 18% increase in
production of its best-selling single-aisle A320 jet family once
demand recovers from the coronavirus crisis, the European
planemaker said on Thursday.
It is among the first visible moves by aerospace firms to
prepare for a possible bounce back from the pandemic and comes
days after a major buyer, Wizz Air, predicted a quick
rebound for the strongest budget carriers.
However, the plan for an increase depends on a comprehensive
recovery of the planemaker's biggest customers that have ordered
hundreds of jets, including airlines in Southeast Asia which are
currently struggling to take deliveries, industry sources said.
Airbus said it had asked suppliers to "protect" a production
rate of 47 A320-family jets a month, up from 40, meaning it
wants suppliers to be ready to support that rate when needed.
It indicated the earliest such a switch could take place
would be July 2021, adding no decision had been taken.
"For the A320 family, we plan to maintain 'rate 40' until
summer next year and we have asked the supply chain to protect
'rate 47' to be prepared for when the market recovers," a
spokesman said, confirming a Financial Times report.
"This decision aims to provide some visibility to our supply
chain and ensure that our industrial ecosystem will be
adequately prepared to gradually increase production eventually,
when the right conditions are met," the spokesman said.
LOW-COST TRIO
The industry is still agonizing over a possible recovery
with most analysts saying it is still too early to gauge the
speed and shape of the flight path out of its worst downturn.
British Airways owner IAG warned on Thursday a
travel slump from the pandemic had deepened.
A top Airbus executive told a newspaper earlier this month
that the situation in early autumn was worse than Airbus, which
is shedding 15,000 jobs, had expected in the summer.
Still, Airbus maintained output in the face of warnings of a
steeper downturn and also increased jet deliveries in September.
It has said it expects traffic to return to pre-crisis
levels between 2023 and 2025, but with a split between in-demand
single-aisle A320 jets and plunging demand for bigger models.
Holding the keys to any production increase are the breadth
of available financing and the appetite of a trio of heavyweight
budget carriers, industry sources said: India's IndiGo,
Malaysia's AirAsia and Lion Air of Indonesia.
IndiGo has taken 29 jets this year as it expands
its grip domestically, but deliveries to AirAsia and Lion Air
are at a virtual standstill with no immediate sign of a pickup.
Linked to that is Airbus' ability to whittle down a backlog
of undelivered jets before raising output.
"We believe (an increase) would happen only if aircraft
inventory were cleared in the next nine months. That is where
things don't yet stack up, in our view," Jefferies analyst Sandy
Morris said in a note.
Before the crisis, Airbus was making 60 A320-family jets a
month to meet rampant travel demand, with plans to reach 63 in
2021 and add a further 1-2 jets per month in both 2022 and 2023.
Worldwide lockdowns forced it to tear up those ambitions.
By restoring an upward bias in its production plans earlier
than expected, Airbus may increase pressure on Boeing Co
to find new homes for up to half the 400 737 MAX aircraft it has
produced while the jet has been grounded during an 18-month
safety ban.
Dozens of the jets have been cancelled and only once the MAX
is cleared to fly and the jets have been re-sold and delivered
can Boeing return to high-speed new production, market sources
said. It is in talks with airlines including Southwest Airlines
Co.
(Reporting by Tim Hepher in Paris
Editing by David Evans and Matthew Lewis)
International Airlines (IAG)
