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Airbus sees jet demand conquering suppliers' output fears

Stock MarketsOct 06, 2021 09:41AM ET
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© Reuters. FILE PHOTO: Airbus Chief Commercial Officer Christian Scherer is interviewed by Reuters at the International Air Transport Association's Annual General Meeting in Boston, Massachusetts, U.S., October 4, 2021. REUTERS/Brian Snyder

By Tim Hepher

BOSTON (Reuters) -Airbus is sticking to its quest for record jet output after airlines reported glimmers of a post-pandemic recovery this week, and believes engine makers who have questioned its most ambitious proposals will be "unable to resist" demand.

Airbus has said it hopes to almost double jet production ina few years as borders reopen. Engine makers fear doing so tooquickly could upset their own recovery, by forcing existing jetsinto retirement rather than their repair shops. Interviewed at the airline industry's main annual event,Airbus Chief Commercial Officer Christian Scherer held out theprospect that Airbus would play on fierce competition betweenengine makers as it aims to secure future output of its A320neo. "There will be engines. That is the beauty of having enginecompetition in the programme," he told Reuters on the sidelinesof a meeting of the International Air Transport Association, the first such industry gathering since the pandemic. "There is a lot of rhetoric ... (but) at the end of the dayif customers ... demand more modern airplanes ... no enginemaker in the world is going to be able to resist the call ofnature. So I’m not concerned about it.” Airbus is sold out of its A320neo series until 2026, he said. In May, Airbus issued a mix of firm targets and scenariosthat could lift narrowbody A320-family output to 75 jets a monthby 2025 from about 40 this year, and 60 pre-COVID. The head of France's Safran (PA:SAF), part of the CFM engineventure with General Electric (NYSE:GE), said earlier this year hewas not sure whether rates above 60 could be sustained. Also speaking in July, Greg Hayes, CEO of Pratt & Whitneyparent Raytheon Technologies (NYSE:RTX), expressed surprise at"pretty aggressive" Airbus output plans. Both engine makers offer competing engines on the A320neo,the most-sold Airbus jet which competes with the Boeing (NYSE:BA) 737 MAX. 'NO OVERPRODUCTION' Asked if Airbus had given up on studying the possibility ofincreasing A320neo output beyond the most recent firm target of63 a month to 70 or 75, Scherer said: "absolutely not". He added: "It is a scenario right now. It is not a committedplan. But it is a sizing exercise that we must do because itcorresponds to demand – verified demand, not theoretical demand– that we are experiencing, including in meetings we are havingright here.”

While IATA discussed tougher climate pledges, airlines,suppliers and leasing companies mingled behind the sceneshaunted by the losses and overdue payments left by the industry's worst ever crisis, while reporting some interest in new jets. Scherer said conversations were beginning to turn towardsrecovery after a spate of restructurings of plane orders. "The realisation that the world is expecting movementtowards more sustainable, more eco-friendly flying isaccelerating the need for the most modern airplanes, he said. Scherer addressed some suppliers' concerns that Airbus wouldrace to build jets to meet that demand, but only temporarily,leaving them to absorb costly capacity if the recovery falters. "I think recent history has shown Airbus has been able tomanage its supply and demand very, very rigorously almost to thedot on the right spot," Scherer said. "You have to trust that we will continue to do that in thefuture and not shoot ourselves in the foot by overproducingairplanes that we can’t sell."

Airbus sees jet demand conquering suppliers' output fears

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