Airbus eases pressure on suppliers but keeps output goals -sources (updated)

BOC Aviation

21/09/2022 16:21

(Adds analyst comments)
    By Tim Hepher and Jamie Freed
    PARIS/SINGAPORE, Sept 21 (Reuters) - Airbus  AIR.PA  is
quietly relaxing pressure on suppliers to commit to a sharp
output hike to 75 narrow-body jets a month by mid-decade, amid
growing doubts over the ability of battered supply chains to
meet the deadline, industry sources said.
    Officially, Airbus continues to target output of 75
narrow-body jets a month in 2025, after an interim target of 65
jets slipped last month. It is poised to reaffirm both output
goals at an investor meeting later this week, industry sources
said.
    But as more suppliers sound the alarm over parts and labour
shortages, Airbus has privately recognised the challenges of
reaching the higher target by 2025 even as it sticks firmly to
an earlier goal of 65 a month, up from 50 or so now, they said.
    Requests for detailed plans of how suppliers will get to 75
are "going quiet," a senior aerospace source told Reuters.
    In July, Airbus pushed back its interim target for 65
A320-family jets a month by six months to early 2024, citing
"supply chain challenges". At the same time, Chief Executive
Guillaume Faury said Airbus continued to aim for 75 a month in
2025.
    "The A320-family monthly production target of 75 for 2025
remains unchanged," an Airbus spokesperson said on Wednesday.   
    The head of the world's largest aerospace supplier, Raytheon
Technologies  RTX.N  Chief Executive Greg Hayes, last week
called into question this end-target.
    "If you take a look at the projections for Airbus, we think
that Airbus by 2025 will be at rate 65 (a month). And Guillaume
(Faury) might say rate 75, but we think rate 65 is doable," he
told a Morgan Stanley conference.
    Others say the end-target is achievable but not before 2026.
    
    FLATTER GROWTH
    A Jefferies poll of suppliers published on Wednesday
suggested parts shortages would remain "largely through the end
of 2023".
    Agency Partners analyst Sash Tusa said a worsening economy
pointed to "another bumpy year" in 2023, indicating flatter
growth in production through 2025 than Airbus would like.
    Some aircraft buyers have also questioned the targets.
    "There will be bumps along the way. They may get to 75 (a
month), but not necessarily by 2025," BOC Aviation  2588.HK 
Chief Executive Robert Martin told Reuters.
    Much will depend on whether manufacturers can resolve supply
chain difficulties next year, he said.
    "But then we have a different problem: potentially there's a
demand problem, which is what happens in Europe in particular."
    Europe is facing a winter energy crisis expected to weigh on
consumer spending. Even so, Airbus and Boeing  BA.N  remain
optimistic on underlying travel and airplane demand.
    In July, Airbus raised its forecasts for jet deliveries over
the next 20 years as high fuel bills and environmental pressures
prompt airlines to seek more fuel-efficient planes.
    Industry sources say it is also under pressure to raise
output to whittle down a bulge of orders in the middle of the
decade after many airlines deferred deliveries during COVID-19.
    The Airbus spokesperson said on Wednesday the company's
production decisions follow "analysis of global demand and an
assessment of the readiness of the industrial eco-system". 

 (Reporting by Tim Hepher, Jamie Freed
Editing by Mark Potter and Deepa Babington)
 ((tim.hepher@thomsonreuters.com; +33 1 49 49 54 52; Reuters
Messaging: tim.hepher.thomsonreuters@reuters.net))