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Airbus boosts production rates on A320 single-aisle models

03/02/2015| 4:33:15 PM|

Airbus Group NV plans to boost production of its workhorse A320 single-aisle aircraft to 50 a month to meet surging demand for more fuel-efficient airliners.

(Bloomberg) --- Airbus Group NV plans to boost production of its workhorse A320 single-aisle aircraft to 50 a month to meet surging demand for more fuel-efficient airliners.

The increase by the first quarter of 2017 from today’s 42 will help airlines get earlier delivery slots for A320neo models already sold into the next decade, and the company said it’s working on studies to move beyond even 60 a month. Airbus disclosed the plans as it announced a 15 percent gain in 2014 profit on higher plane deliveries. The stock surged as much as 8 percent in Paris trading, the most in more than a year.

The A320 family, introduced in the late 1980s and assembled at two sites in Europe and one in China, has helped Airbus create a global duopoly with Boeing Co. in the civil aircraft market, which relies predominantly on smaller airliners like the A320 and 737. Airbus’s new production plans are still below targets by Boeing for 52 single-aisle 737s a month by 2018.

“we wouldn’t decide this if there wasn’t strong demand,” Chief Executive Officer Tom Enders said in a television interview with Guy Johnson. “The demand is there, we have more than 5,000 aircraft in our backlog, so obviously we can ramp up production.”

Airbus rose as much as 4.12 euros to 55.75 euros in Paris, the most since Dec. 11, 2013, to trade at a 52-week high. Last year, Airbus lost 26 percent in value, after almost doubling in 2013. Boeing lost 4.8 percent in 2014.

Record Payout

The European planemaker also announced a drop in production for its wide-body, twin-engine A330 plane, to six a month from early 2016 versus 10 today. Production will climb again as the manufacturer start building a more-fuel-efficient variant with new engines, dubbed the A330neo. Airbus confirmed its plan to break even on its A380 superjumbo in 2015.

Earnings at the parent company for 2014 before interest, tax and one-time items rose to 4.07 billion euros ($4.56 billion) from 3.54 billion euros, beating estimates by analysts for 3.84 billion euros. The company took a charge of 551 million euros for penalties related to delays of its A400M military transport. Sales rose 5 percent to 60.7 billion euros.

Airbus proposed a record dividend of 1.20 euros a share, up 60 percent from 75 cents in 2013.

The European aerospace company, which draws two thirds of sales from its airliner unit, is particularly reliant on its best-selling single-aisle series. In 2014, out of 629 deliveries, 490 were short-haul models, providing the bulk of revenue.

Airbus assembles its A320 and related variants mainly in Hamburg and Toulouse in southern France, with a plant in Tianjin, China, producing four planes monthly. It will be adding four A320neos monthly by 2017 at a new plant in Mobile, Alabama.

The company predicted “slightly higher” deliveries for this year than in 2014, and reiterated plans to break even with its A380, which has struggled to attract fresh orders. Sales will rise this year, and Airbus said it expects a “slight” increase in operating earnings before certain items, with a break-even on cash flow before acquisitions.

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TAGS: Airbus | A320 | manufacture
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