Airbus Is Said to Boost A320 Neo Production to Meet High Demand

(Bloomberg) -- Airbus SE and its suppliers have agreed to lift the target production rate for its A320neo model in response to strong demand for the narrow-body aircraft, according to people familiar with the matter.

The European planemaker now aims to produce 63 single-aisle planes a month by the second quarter of 2019, up from a previous goal of 60, said the people, who asked not to be identified as the new rate hasn’t been made public. The company has previously said it could lift rates to as high as 70 a month, based on market demand, and was in talks with its suppliers.

Airbus has faced pushback on A320 rates, predominantly from engine makers CFM International and Pratt & Whitney, with both signaling that capacity is likely too stretched to meet the upper level target. The turbine producers have battled to meet existing goals, with Pratt’s most recent engine-seal hiccup stalling deliveries until later this month. Pratt is owned by United Technologies Corp. while CFM is a venture of General Electric Co. and France’s Safran SA.

An Airbus spokesman declined to comment specifically on the rate increase but said the company is studying its options, and has a “strong backlog, which supports our ramp-up ambitions.”

Airlines are still asking about future purchases, Airbus head of sales Eric Schulz said in an interview earlier Tuesday after securing an order for 35 A320neo aircraft from Stockholm-based SAS AB. The SAS deal, excluding an additional 15 planes the carrier will lease, is valued at $3.9 billion before discounts.

Shares of Airbus traded 0.5 percent lower at 94.99 euros as of 10:01 a.m. in Paris on Wednesday. The stock has gained 15 percent this year, valuing the company at almost 74 billion euros ($92 billion).

To contact the reporter on this story: Benjamin Katz in London at bkatz38@bloomberg.net.

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Christopher Jasper

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