Airbus Prepares for Potential A320 Jet Production Ramp-Up Next Year -- Update

--Airbus is preparing for a potential production boost of best-selling, single-aisle A320 aircraft by up to 18% next year

--The company said it isn't a final decision but a preparation for when the market recovers from the coronavirus crisis

--The European plane maker traded 5.3% higher after the news

By Olivia Bugault

Airbus SE has asked suppliers to be prepared for a possible production boost of its A320 family of jets by up to 18% for the second half of 2021, the European plane maker said Friday.

The news, which was reported by the Financial Times on Thursday, comes as the aerospace industry is still crippled by the fallout from the coronavirus pandemic.

Airbus in April slashed its production rate by roughly a third to adapt to collapsing travel demand and what is expected to be years of reduced traffic. At the time, Airbus--which was dealing with many requests by airlines to defer or cancel orders--decided to cut its production of A320 aircraft to an average of 40 a month compared with 60 previously.

After a re-evaluation of the market post-summer, the aerospace giant plans to maintain this level of production for its best-selling narrow-body family jet until summer 2021, and has asked its supply chain to "protect" a rate of up to 47 aircraft a month to be ready for when the market recovers, it said.

"The planned adaptations are the best matching we can make today and are in line with overall market estimations of traffic levels coming back between 2023 and 2025," Airbus said. "This reflects the view that we see the single-aisle market coming back first," it added.

On the other hand, the production rate of its wide-body A330 and A380 jets should remain the same, it said.

Airbus delivered 145 aircraft in its third quarter and only 13 were wide-body aircraft, investment bank Jefferies said. Deliveries of the profitable A320 jets fell by three in the quarter compared with the same period last year, the brokerage added.

However, Jefferies believes "that increase would happen only if aircraft inventory were cleared in the next nine months."

Airbus said the decision isn't final but a preparation for when certain conditions are met.

"This crisis is unprecedented and there is still a lot of uncertainty," the company said.

Shares at 1036 GMT were trading 5.3% higher at EUR67.89.

Write to Olivia Bugault at [e-mail]

(END) Dow Jones Newswires

October 23, 2020 06:55 ET (10:55 GMT)

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