Airbus to meet suppliers amid jet output concerns, sources say

January 8, 2021

By Tim Hepher

PARIS (Reuters) – Airbus is planning a summit meeting with major suppliers amid speculation that it may have to delay planned jet output increases as Europe faces a resurgent coronavirus crisis, industry sources said on Friday.

Next week’s briefing by Airbus Chief Executive Guillaume Faury for the heads of several suppliers is expected to set the manufacturing tone for the coming year.

Airbus has said it wants to be in shape to raise benchmark A320-family output by 18% to 47 jets a month by July, but the goal has already slipped to the fourth quarter, according to analysts, with some saying it could slip further.

“It looks like the rate of 47 is slipping to the right,” said one supply chain source.

Another supplier said the rate was beyond reach for 2021.

Asked about the output plans at a news conference late on Friday, Chief Executive Guillaume Faury said the company’s current plans point towards an increase in the second half of the year but noted “a lot of uncertainties” because of the coronavirus crisis.

Chief Operating Officer Michael Schoellhorn last month told the Hamburger Abendblatt newspaper that output “could … rise a little later or flatter. We are watching the situation closely”.

An Airbus spokesman said no decision had been made.

Airbus is involved in a stand-off with some suppliers who want guaranteed or upfront payments for parts to support any increase, in case volatile demand falls again. Those companies are in turn receiving similar demands from their own suppliers.

That is making it harder for Airbus to confirm the timing of an increase, sources said, though it is focusing for now on maintaining the flexibility to act whenever needed.

Delaying the planned increase in production to 47 aircraft a month would prolong financial pressure just as Airbus is struggling to reach targets for job reductions, especially at its headquarters in France and in German plants, sources said.

Airbus has extended a deadline for voluntary redundancies as part of a restructuring plan affecting up to 15,000 jobs.

Faury is expected to force significant cuts among executive posts as part of the biggest restructuring in the company’s history as it contends with the slump in air travel brought on by the COVID-19 pandemic.

The French CEO on Friday said that the restructuring was “making progress, on track”.

Despite renewed lockdowns in Europe, Airbus confirmed its position as the world’s largest planemaker with stronger than expected deliveries of 566 jets last year.

(Reporting by Tim Hepher; Editing by Paul Simao, Louise Heavens and David Goodman)

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