Airbus Production Ramp-Up ‘Constrained’ by Supply-Chain Woes
Airbus SE’s push to quickly scale up production as air travel recovers from the Covid-19 pandemic is testing suppliers that have struggled to hire enough workers and secure raw materials.
Back in May, the European planemaker said it would increase output of its best-selling A320 family of aircraft to 45 per month by the fourth quarter of 2021, rising to as high as 70 in early 2024. The demand is there to support those rates and higher, but suppliers aren’t in the best position to deliver, Airbus Chief Commercial Officer Christian Scherer said in an interview.
“There are suppliers that have been severely hurt by the downturn and have lost some of their surface manpower, investment capability or both,” Scherer said. “We’re in a ramp-up situation that is supply-chain constrained.”
Airbus struggled to deliver planes fast enough before the coronavirus pandemic and its plans come on the back of cuts of about a third to production rates during the crisis. That leaves suppliers, many of them small companies, scrambling to rehire and buy materials, all after losing valuable revenue during the last 18 months. Global supply-chain snarls haven’t helped.
The sales chief sees a clear case for rates above 70 and is “if anything, slightly frustrated” with stated output plans, he said. The company is seeing explicit interest in new orders in Europe, where demand is rapidly improving as the vaccine rollout gathers pace and travel restrictions ease, he added.
Shares of Airbus advanced 0.6% as of 9:16 a.m. in Paris. The stock is up 30% year-to-date.
Airbus Chief Executive Officer Guillaume Faury echoed the supply-chain concerns in an interview with Bloomberg Television’s Guy Johnson Wednesday. He said that producers are in a difficult spot.
“Our suppliers have challenges in accessing raw materials, including on the prices of raw material, to reopen plants, to rehire or hire people for the ramp up,” he said. “In this challenging situation it’s not easy, and we are prudent when it comes to the speed of recovery of our production.”
More comments from Scherer interview:
- Airbus is nearing a restructured contract with Malaysian low-cost long-haul carrier AirAsia X
- There could be orders for the A350 freighter announced in Dubai, though the company is not “driven by air shows”
- The company was “very happy” with Jet2’s decision to order Airbus planes after competing with Boeing Co.’s Max
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