Airbus readjusts focus to backlog retention

Paris Air Show » 2009
June 12, 2009, 5:30 AM

In the face of the global economic recession, Airbus does not expect to reach its previously predicted 300 new orders this year and has switched its efforts to retaining as much of its order backlog as possible. Nevertheless, the EADS subsidiary believes the downturn in airline traffic is close to the bottom and that gradual economic recovery next year will be accompanied by improved market prospects. If the European airframer’s early-2009 sales performance–30 gross orders during the January-April period–is maintained through the year the total will be well below expectations, according to COO for customers John Leahy.

Consequently, Airbus is trying to keep production as stable as possible and expects that A320 build rates, set to fall from 36 per month to 34 in October, could return to current levels by the end of next year. Following the huge numbers of aircraft ordered before the worldwide downturn, Airbus production remains overbooked for the next 12 months at least and the manufacturer is studying when and by how much it could increase A320 and currently frozen A330 rates in late 2010 or soon after.

Last month, Airbus programs executive vice president Tom Williams told a suppliers meeting in Toulouse that the company sees no need to reduce rates beyond present plans. With characteristic optimism, Leahy has disputed doom-laden predictions by airline leaders saying that A320 production could reach even 40 per month by the end of 2011.

While deliveries of the A380 very large airliner this year will be 14 rather than the previously planned 18, Williams pointed out that production continues to ramp up. “We were going from two a month to three; now, instead, we’ll go to two-and-a-half.”

A major factor for manufacturers in any recovery remains the availability of customer finance. Airbus plans to increase its involvement in this area until an expected return of private funding sources to the market in 2010 or 2011. Leahy confirmed increased activity by government export-credit agencies, which are expected to participate in at least half of Airbus’s deliveries this year compared with about 20 percent last year. The company expects to deliver around 480 aircraft in 2009, down only slightly on 2008’s total of 483.

For Leahy, the important question is, “Can we keep assembly lines steady? That’s where all the effort is going.” But operators must play their part. “We can get through this crisis if airlines just do aircraft retirements a little bit faster,” he concluded.

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