Airbus is increasing production of its most successful single-aisle passenger jets more slowly than expected, dampening hopes of an early recovery for an industry devastated by the collapse in air travel.
The European aerospace manufacturer will raise production of its popular A320 family of aircraft from 40 to 45 a month by the end of this year after the resurgence in the coronavirus.
It follows its request to suppliers last autumn to be ready to move 47 aircraft from this summer, which at the time was taken as a sign of confidence that recovery in demand could come as early as July.
Investors and analysts were also encouraged about the implications for group cash flow, heavily influenced by the number of aircraft deliveries.
On Thursday, however, Airbus said the group now aimed to take a “lower for longer” approach to increasing production rates.
Airbus has told suppliers it wants to produce 43 single-aisle passenger jets a month from the third quarter of this year, and 45 a month by the final three months.
A person with knowledge of the situation said the group had told suppliers it still aimed to reach 47 a month — or even more — from next year.
Airbus is also delaying any increase in production of the A350 wide-body, currently at a rate of five a month.
New, more easily transmissible variants of Covid-19 have put governments around the world on high alert, promoting new lockdowns in several countries, including the UK.
This latest wave has hit air travel hard, and is raising doubts over whether airlines will be able to take advantage of the normally lucrative summer season.
The timing of any recovery in passenger traffic now appears to have been postponed, putting further pressure on a sorely weakened airline industry. Iata, the aviation trade body, this week called for a further $80bn in aid to the aviation industry, on top of the $170bn already identified.
This was needed simply to survive until June, when the sector hopes vaccines will be more widely deployed and current restrictions will begin to ease.
In that context, Airbus’s decision to raise rates could still be seen as positive, indicating there will still be appetite for new aircraft despite the continued difficulties.
Airbus and its rival Boeing slashed production rates of both single and twin-aisle aircraft by between a third and a half last year when the pandemic first hit.
Boeing will also begin to increase production of its 737 Max single-aisle jet this year, now that it has been certified to fly again after two fatal accidents. But the rate will be substantially lower than Airbus, reaching 31 a month by the beginning of 2022.
Airbus also appears bullish about growth in the regional market. The group is pressing ahead with a planned rate increase from four to five a month for its smaller A220 aircraft — the former C-Series acquired from Bombardier. This would happen at the end of the first quarter, the group said.
Airbus’s confidence was reflected in a market forecast this week by Avolon, one of the world’s leading aircraft lessors. The group forecast that recovery would be quicker than expected, with passengers likely to fly more than the 50 per cent of 2019 capacity forecast by Iata.
Two-thirds of new passenger aircraft deliveries would be financed by lessors, Avolon predicted.
“Three forces will drive recovery in 2021: vaccines, fiscal stimulus and monetary easing,” the lessor said. Government support had also assured “survival for most flag carriers, but low-cost carriers are best positioned in most markets to thrive as the recovery takes shape”.
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