Airbus Set to Unveil Made-In-America A220, Cutting In on Boeing’s Home Turf

Airbus SE is preparing to deliver its first U.S.-made A220 jetliner to Delta Air Lines Inc. as soon as this month, underscoring the European planemaker’s growing presence on Boeing Co.’s home turf.

Since opening a plant in 2015 in Mobile, Alabama, Airbus has used it to make more than 180 planes from its other narrow-body family -- the A320 -- for U.S. customers, Jeffrey Knittel, chief executive officer of Airbus Americas, said in an interview.

Doubling down on the Alabama site with a new assembly line building A220s, an advanced Canadian-designed jet, enables Airbus to avoid U.S.-imposed tariffs for the planes it delivers to American carriers. As trade tensions flare and a long-running dispute nears its resolution in the World Trade Organization, the U.S. outpost shores up the global reach of the world’s largest planemaker.

Airbus Set to Unveil Made-In-America A220, Cutting In on Boeing’s Home Turf

“Mobile will not be affected relative to the WTO strategy,” Knittel said by phone. “As a matter of fact, Mobile has proven the logic of a broad-based industrial footprint.”

Over the coming weeks, a panel of three WTO arbiters will determine whether the European Union can retaliate against the U.S. for any illegal subsidies provided to Boeing. The trade body has already awarded $7.5 billion to the U.S. in a parallel dispute about European subsidies to Airbus. The latest ruling could spur the two sides to settle their 15-year-old trade battle.

International Expansion

While Boeing confines its jet assembly to the U.S., Toulouse, France-based Airbus has extended its industrial footprint into key international markets. It produces A320 aircraft in four countries: Germany, France, China and the U.S. The A220, which Airbus acquired from struggling Bombardier Inc., is made in Quebec and Mobile.

Airbus’s expansion anticipated a “new phase in globalization,” marked by increasingly nationalistic policies and trade restrictions, said aerospace analyst Richard Aboulafia. “That’s the big picture, one that requires a greater in-country presence. It’s no longer taking open borders for granted.”

The strategy has its downsides. With its facilities spread out in different countries, Airbus wasn’t able to move as quickly as Boeing to pare output and costs after the coronavirus pandemic caused demand for new jetliners to plunge. In Mobile, Airbus is pausing plans to speed up A320 production as it cuts global output for the jetliner family to 40 planes a month, Knittel said.

Delta has only taken three of the 17 of the smaller A220-100 jets it was originally scheduled to receive this year, and its plans for the Mobile-made A220-300 models aren’t clear. The carrier has been working with Airbus to minimize deliveries over the next 18 to 24 months, Delta Chief Executive Ed Bastian said in July.

Still, to avoid larger-scale layoffs in its U.S. operations, Airbus plans to shift some employees from A320 production to the A220 line, where work is still ramping up, Knittel said. Airbus plans to build four A220 a month in Mobile by mid-decade, which would double its current output.

“We’re working through the issues. We’ve basically flattened the production rate,” Knittel said of the Mobile site’s response to the market turmoil. “We’re hopeful that in the future things will pick back up, but we have to prepare for the climate we’re in.”

©2020 Bloomberg L.P.

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