Airbus debates new A320 output hike, suffers test glitch

Thu May 28, 2015 8:28pm EDT
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By Tim Hepher

TOULOUSE (Reuters) - Airbus (AIR.PA: Quote) is leaning toward a new hike in production of its A320 jet, raising the stakes in a battle with Boeing to translate record orders into tangible deliveries, but has yet to decide on the risks of handling unprecedented volumes.

Europe's largest aerospace firm indicated the chances were rising that it would increase production targets again just months after setting an output goal of 50 medium-haul aircraft a month by early 2017, compared with 42 a month now.

The debate is the latest evidence of a prolonged upcycle in the aerospace industry as demand soars from new players in emerging markets and established airlines renew older fleets.

But a decision on whether to increase output again depends mainly on whether suppliers can keep pace with the challenges of producing a 150-seat jetliner every few hours, just as other civil aerospace firms are ramping up volumes worldwide.

At a media briefing on Thursday, company officials conveyed different levels of urgency about the decision, which would only follow a thorough analysis of several tiers of suppliers.

Sales chief John Leahy said likely demand already exceeded the planemaker's existing production goal of 50 planes a month and the market could absorb over 60, possibly as many as 63. He expected Airbus to take a decision this year.

But chief operating officer Tom Williams said there were still "hot spots" in the supply chain and that he would not be "boxed in" to setting a deadline for the decision.

He said that supply chain risks were by definition increasing as the industry tackles ever greater volumes.   Continued...

People are silhouetted past a logo of the Airbus Group during the Airbus annual news conference in Colomiers, near Toulouse January 13, 2015. REUTERS/Regis Duvignau