Airbus boosts wide-body production, increasing pressure on Boeing
Plane maker says it will lift the monthly production rates of its A350 flagship wide body
Airbus SE is rapidly boosting production of its two biggest aircraft models, bringing rates close to prepandemic levels as it prepares to lure surging interest amid the recovery in international traffic.
The plane maker on Thursday said it would lift monthly production rates of its A350 flagship wide body from six a month to nine—just short of 2019 levels of about 10—by the end of 2025. Production of its smaller A330neo jet will rise from a rate of three a month now to four next year.
The company’s shares were trading up almost 3% midday in Europe, partially buoyed by it boosting its dividend 20%.
Airbus also named a new chief financial officer ahead of its annual earnings release, appointing Thomas Toepfer to take over the role from Sept. 1. Mr. Toepfer is currently the CFO of German polymer manufacturer Covestro AG.
The move to raise production of its biggest jets, earlier reported earlier this week by The Wall Street Journal, comes as bookings of longer-haul, international flights see a quicker-than-expected surge—even at inflated prices. That has left airlines clamoring to bring back into service wide-body models that were mothballed at the height of the Covid-19 pandemic and rushing to book out available rentals from aircraft-leasing companies.
Airbus bolstered its wide-body backlog this month, initially by recovering an order for 23 of its A350 models from Qatar Airways as part of a settlement in a long-running dispute over paint defects. That was followed by a record order from Air India this week that was split between Airbus and Boeing Co., and which included a deal for 40 Airbus A350s.
Boeing has meanwhile pushed back its own plans to boost production of its bestselling 787 Dreamliner model. CFO Brian West said last month that the goal of producing five of the models each month has been shifted to the back end of this year compared with a current monthly rate of one to two.
Boeing has faced multiple setbacks with both of its biggest aircraft models. The company halted deliveries of the 787 for close to two years following a string of manufacturing and regulatory issues and has been working to recover production after getting sign off from the Federal Aviation Administration in July. Its 777X model—the world’s biggest commercial aircraft currently available to order—is running years behind its development schedule.
The ambitious move on wide bodies by Airbus comes as both manufacturers struggle with an overstretched supply chain that is battling to recover from the impact of Covid-19 on the sector. That has led to late deliveries to customers of both wide-body and predominantly on narrow-body aircraft—the workhorse of the airline industry.
Airbus has already been attempting an aggressive ramp-up of its narrow-body lines, with goals to lift the output of its popular A320neo family of jets to a rate of 75 a month—higher than prepandemic levels—and extend its market-share lead over Boeing’s 737 MAX.
Those plans were again delayed on Thursday, with Airbus now targeting that rate in 2026, a year later than originally planned. It is also delaying its initial target of building 65 A320neos a month until the end of next year. In May last year, Airbus said it would hit that target in the summer of 2023.
The supply-chain disruptions led Airbus to cut its delivery goal last year, with the company handing over 661 commercial aircraft in 2022 compared with plans to deliver 720 to customers. The company said Thursday it now plans to only meet that target of 720 this year.
“The situation has been quite frustrating," Chief Executive Guillaume Faury said on a call with analysts. “It will take us two years to achieve what we wanted to do in one."
Despite the lower-than-planned deliveries, the tally was still up 8% from the previous year, which contributed to a 1% rise in net income to 4.25 billion euros, equivalent to $4.5 billion. The company said it would raise its dividend by 20% to €1.80 a share after reinstating the payment last year.
Airbus on Wednesday appointed Thomas Toepfer as its new CFO. Mr. Toepfer is currently the CFO of German polymer manufacturer Covestro AG. He will take over the role on Sept. 1.
