AIR Airbus SE

By Benjamin Katz 

TOULOUSE, France -- Airbus SE is ramping up production of its bestselling single-aisle jet, moving to fill a hole in the market created by the prolonged grounding of rival Boeing Co.'s 737 MAX.

The increase comes as airlines are planning for a second summer travel season without their MAX jets. Southwest Airlines Co., the world's largest MAX operator, said Thursday that it has cut the plane from its schedule through Aug. 10, two months longer than planned.

Airbus on Thursday outlined plans to raise production of its A320neo to as many as 67 a month by 2023, from the current target of 63 a month in 2021. The A320neo competes directly with the MAX.

Both jetliners have become the workhorses of many airlines' commercial fleets. The fuel-efficient jets, with their extended ranges and low-passenger load, have been popular with airlines for their flexibility.

Airbus hasn't yet materially benefited from the grounding of the MAX, however. That is because both jets have been so popular that their order books stretch out for years. Airbus has struggled with production issues for many of its jets, making it difficult to ramp up output of the A320neo.

Underscoring the new pressure on Boeing, Nigeria's Green Africa Airways on Thursday placed a major order for Airbus's smaller A220 narrow-body jets. The airline had previously placed a commitment for as many as 100 Boeing MAX jets, an order that is now in jeopardy, according to people familiar with the matter.

The Nigerian startup turned to Airbus amid uncertainty about when it would start receiving its MAX jets, after having to postpone the airline's launch, according to a company executive.

Airlines managed through last summer by trimming service from routes with multiple flights and rerouting passengers. Some kept older planes flying longer, with others renting alternative jets to fill the gap.

Panama-based Copa Holdings SA on Thursday also pushed back the MAX from its schedules until September. And Norwegian Air Shuttle ASA said Thursday that it doesn't expect any of its 18 MAX jets to fly before September, having planned previously to fly them this summer. The airline is due to receive an additional 16 MAX jets this year, 14 of which have already been built.

Chief Financial Officer Geir Karlsen said on an investor call that it is "completely unrealistic" all these will arrive as scheduled. He said Norwegian is renting alternative jets and might not need all the planes it has ordered for the winter schedule.

Airlines typically receive some cancellation options when a plane is more than a year late, which he said he expected some carriers to exercise. "I think Boeing is sitting there today expecting that at least some of the customers will cancel," Mr. Karlsen said.

American Airlines Group Inc. and United Airlines Holdings Inc. have also indicated that further schedule adjustments are likely. Both carriers currently have the MAX on their schedules again from early June.

Boeing grounded its latest version of the 737 last year after two crashes of the jet, which were blamed partly on a faulty flight-control system. The grounding has been extended to the middle of this year.

Boeing halted production of the plane late last year and has been forced to cut back planned deliveries of the aircraft. It has struggled to win deals for its planes amid the MAX crisis. Its order intake last year fell to a 16-year low. The company booked no new orders last month.

Airbus said, overall, its deliveries this year will reach 880 aircraft, topping last year's 863. Still, that represents a slower rate of growth as the company reins in deliveries of its wide-body jets.

Demand for those bigger planes has fallen as airliners gravitate toward the smaller, nimbler jets such as the A320neo. Airbus said it would hand over 40 of its bigger A330s this year, 13 shy of 2019's total. Production of its A350 twin-aisle will be kept just shy of its prior 10-a-month target.

Those moves follow two separate cuts made by Boeing to its 787 Dreamliner. That program has struggled with lower demand from Chinese airlines amid the U.S.-China trade war.

Airbus is also still running about six months behind schedule on narrow-body deliveries, Chief Executive Guillaume Faury said on a call with analysts. The delays are expected to continue for a further 12 to 18 months, he said.

The company has been battling to deliver its customizable, larger and longer-range variant, the A321neo, which has made it more difficult to manufacture the jets using a cookie-cutter approach. Engine glitches are also holding back deliveries. Airbus has had to ship replacement engines to existing operators ahead of handing over new jets, Mr. Faury said.

Airbus said it swung to a loss in 2019 after taking a large charge to settle U.S., U.K. and French allegations of bribery. Airbus reported a full-year net loss of EUR1.36 billion ($1.48 billion), compared with a net profit of EUR3.05 billion in 2018.

The plane maker agreed last month to a EUR3.6 billion settlement with prosecutors, who alleged Airbus used middlemen to make payments to government and airline officials to win orders. Airbus, by settling, wasn't required to admit or deny the charges and avoided possible prosecution in the U.S. and the European Union. It has said it reported the payments to investigators, cooperated with them, and has changed its business practices to prevent further inappropriate payments.

Airbus said it also took a EUR1.2 billion charge related to its A400M military aircraft. Part of that was because of lower expectations for future sales, including from a ban by Germany on exports to Saudi Arabia.

The company said its full-year sales rose 11% to EUR70.48 billion.

Airbus also said Thursday that it had agreed to buy out its partner in the A220. The Wall Street Journal previously reported Airbus was nearing a deal that would allow Bombardier Inc. to exit from the program, previously called the CSeries. Airbus said it would pay $591 million to lift its stake to 75%, with the government of Quebec increasing its ownership to 25%.

--Alison Sider and Doug Cameron contributed to this article.

Write to Benjamin Katz at ben.katz@wsj.com

(END) Dow Jones Newswires

February 13, 2020 15:49 ET (20:49 GMT)

Grafico Azioni Airbus (EU:AIR)
Storico
Da Mar 2024 a Apr 2024

Grafico Azioni Airbus (EU:AIR)
Storico
Da Apr 2023 a Apr 2024