(Updates shares, adds context on deliveries)
By Tim Hepher, Sarah Young and Laurence Frost
PARIS/LONDON, May 28 (Reuters) - The airline industry's most
senior representative on Friday cast doubt on plans by Europe's
Airbus for sharp increases in jetliner production,
saying they appeared overly optimistic.
Willie Walsh, director general of the International Air
Transport Association, voiced scepticism a day after Airbus
published proposals to almost double single-aisle production to
as high as 75 jets a month by 2025.
"Let's wait and see, because obviously there is a huge
disconnect between what the manufacturers say they're going to
produce and what the airlines decide to buy," he told Reuters.
"So, you know that they're in the business of selling. I
don't see that there's going to be the requirement for whatever
it is they're producing," he added in an interview.
Geneva-based IATA has no day-to-day role in aircraft
negotiations, but Walsh was for years among the most influential
buyers as the former head of British Airways and then its parent
group IAG.
Airbus Chief Executive Guillaume Faury defended the
increases on Thursday, telling Reuters that pent-up demand for
flights on medium-haul jets was "very strong".
Investors pushed up shares in the world's largest planemaker
by almost 10% on Thursday, followed by another 1.2% on Friday.
Leasing company executives and some suppliers have responded
more cautiously, amid what industry sources described as a
standoff between Airbus and some suppliers over who should pay
for investments needed to get output to pre-crisis levels.
Faury sought to allay suppliers' concerns, saying the
detailed new roadmap provided by Airbus would allow them to plan
and raise any necessary funding from markets.
MID-DECADE BULGE
Both Airbus and U.S. rival Boeing sell jets years
before they are built and have several years of output on order.
Besides meeting new demand, raising production would allow
Airbus to burn through a bulge of deliveries scheduled for the
middle of the decade after airlines asked for delays during the
COVID-19 pandemic.
Schedules in that period are now so clogged that Airbus has
little left to sell until 2027. Raising rates also warns
airlines to take what is already on order, analysts and industry
sources said.
Critics of the steep output plans cite uncertainties over
demand and the health of airline and supplier finances.
Leasing companies also routinely argue against higher
production to protect the value of existing fleets.
"Whether Airbus gets to 75 a month depends on traffic growth
and aircraft retirement rates over the next four years, and
that’s still very tough to call," said Vertical Research
Partners analyst Rob Stallard.
"The last thing Airbus wants, though, is to be stuck as they
were in 2018 or 2019 with airlines wanting more new planes and
Airbus being unable to satisfy the demand."
Airbus met official delivery targets in those years, but in
2019 it fell about 80 jets short of internal targets owing to
industrial snags and tight supply chains, industry sources say.
(Reporting by Tim Hepher, Sarah Young and Laurence Frost
Editing by Jan Harvey, Nick Zieminski and David Goodman)
International Airlines (IAG)
