January 13, 2014 / 10:15 AM / 5 years ago

Airbus posts record orders, ponders higher production

TOULOUSE, France (Reuters) - Airbus (AIR.PA) stands ready to increase output after winning an industry peak of 1,619 new airplane orders in 2013, as it seeks to turn a record backlog of almost nine years of plane production into hard profit.

John Leahy, Airbus Chief Operating Officer Customers attends the Airbus annual press conference in Colomiers, near Toulouse, January 13, 2014. REUTERS/Regis Duvignau

The European planemaker reclaimed top spot in commercial orders from Boeing (BA.N) after repeatedly revising up its targets last year, but lost the delivery contest to its U.S. rival despite reaching an internal record of 626 deliveries.

While booking more jets than ever in a year dominated by the launch of two new Boeing aircraft, Airbus revoked orders for A380 and A350 jets from India’s Kingfisher Airlines KING.NS, a former star customer now grounded by losses.

After adjusting for cancellations, Airbus total net orders rose 80 percent from the previous year to 1,503 aircraft.

Boeing closed the year with 1,531 gross orders, 1,355 net orders and a record total of flagged deliveries. It remained the world’s largest planemaker but lost the race for orders, Airbus data showed on Monday, confirming a Reuters report.

Airbus said it ended 2013 with an industry-wide record backlog of 5,559 aircraft worth $809 billion at list prices. Boeing’s backlog stood at 5,080 aircraft.

Airbus shares rose 0.7 percent, outpacing the market.

Buoyed by growth in emerging markets and the replacement of old fleets in the United States, planemakers have been riding out the recession with ample orders, but are now shifting their attention towards producing the jets that they have sold.

“We cannot continue at this level (of orders), but what we are doing is continuing to increase production,” Airbus sales chief John Leahy told reporters.

Airbus Chief Executive Fabrice Bregier said Airbus had secured a solid backlog from which to increase production with a stronger than expected show of orders in 2013.

Airbus produces 42 medium-haul A320 jets a month, while Boeing recently announced plans to leapfrog its European rival by hiking its 737 jet output from 38 a month to 47 by 2017. Both firms plan fuel-saving versions that have become hot sellers.

Airbus said it saw enough demand in the market to increase production of the new A320neo model beyond 42 a month in 2018.

In a sign of improved short-term confidence, it also said it could boost output of the existing A320ceo even earlier.

“We still have some homework but we believe there is some potential to go higher than rate 42; there is an upside and we are studying it for the (A320)ceo,” Airbus Chief Executive Fabrice Bregier told reporters.

“Then when we have moved to the (A320)neo we know that we will ramp up again. ... We will go higher than rate 42 (per month) in 2018, 2019 and following years.”

Airbus has been hinting at possible production increases in recent months but Bregier’s comments give the strongest indication yet that it is bracing to speed up assembly lines for the A320, which is the company’s main cash cow.

There have been question marks over how quickly the firm’s network of suppliers can keep up with increased production.


Amid talk of disciplined output increases, Airbus’s annual press conference lacked some of the fizz of previous ceremonies at which orders and customer conquests dominated proceedings.

The company, which once dimmed the lights and produced a shimmering crystal ball to unveil its next annual order target, refrained from giving a numerical prediction of orders.

Airbus instead said it expected 2014 orders to exceed deliveries, which it predicted would be about unchanged this year. The comments imply around 630 orders for the year.

“Order numbers not really an issue given the backlog,” said Zafar Khan, aerospace analyst at Societe Generale in London.

“The industry does not have a demand problem but rather a supply challenge to satisfy the huge requirement for new fuel-efficient aircraft.”

The company believes it has succeeded in taming the cyclicality of aerospace markets with conservative but incremental steps in deliveries during much of the past decade.

However, some analysts say risks of a downturn remain.

“The de-emphasizing of the order intake clearly goes with an anticipation that it now slows, which is typically the start of the slowing of the overall cycle,” Agency Partners analyst Nick Cunningham said.

Leahy said the market could bear over 50 A320neo jets a month and as many as 14 A350s if supplies were available. Airbus plans to produce 10 A350s a month by end-2018.

It said development of the carbon-composite wide-body A350 jet, designed to compete with Boeing’s 787 Dreamliner and the Boeing 777 mini-jumbo, remained on track but challenging.

Certification trials will start in two months, Bregier said. Airbus plans to deliver the first A350 by end-year.

“Risks on the A350 programme are lowering every day but the challenges are also changing,” Bregier said.

Together with plans to break even on the A380 superjumbo in 2015, the A350’s progress is key to helping the planemaking subsidiary of Airbus Group, recently renamed from EADS, meet its goal of roughly doubling its margins to 10 percent by 2015.

“If we deliver the A350 without hiccups and get control of ramp-up and costs, we will have largely achieved the target; the last element was A380 breakeven,” Bregier said.

Editing by Mark John, John Stonestreet

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below