October 24, 2018 / 6:37 PM / a month ago

Airbus eyes A220 jet cost cuts ahead of Montreal supplier meeting

MONTREAL (Reuters) - European planemaker Airbus SE (AIR.PA) is working to improve quality and slash costs on the production of its new A220 jet, company executives said on Wednesday, ahead of a gathering with suppliers this week in Montreal.

FILE PHOTO: Airbus Commercial Aircraft President Guillaume Faury poses during the unveiling of an Airbus A220-300 aircraft after its landing in Colomiers near Toulouse, France, July 10, 2018. REUTERS/Regis Duvignau/File Photo

“We are targeting deals with suppliers for sure,” A220 program head Philippe Balducchi told reporters, noting a need to reduce the plane’s cost “quite significantly.”

Planemakers have been pushing suppliers to lower costs even as production rises.

Earlier this year Airbus took a majority stake in Bombardier’s 110- to 130-seat CSeries jetliner program, in a deal that uses the European company’s cost-cutting and marketing muscle to revive the money-losing Canadian venture. Canada’s Bombardier holds a minority stake in the plane program which was renamed the A220.

Guillaume Faury, president of Airbus’ commercial planemaking business, said the company has invested heavily to ramp up the program, but declined to specify how much, or say when the A220 would become profitable.

Faury will replace Airbus Chief Executive Tom Enders when he retires in April 2019.

“Right now we are at the beginning of the program,” said Faury, who will also attend Friday’s delivery of the first A220 plane to U.S. carrier Delta Air lines (DAL.N).

Faury also confirmed that new variants of the A321neo passenger jet had contributed to delivery delays at an Airbus plant in Hamburg, Germany, but said engineers were in the midst of resolving the problem.

Reuters reported on Tuesday that Airbus faced fresh snags related to the A321neo, on top of recent engine delays which had disrupted the switchover from models with current generation of engines known as the ‘ceo’ and re-engined ‘neo’ models.

Asked about Airbus’s problems in Hamburg, Faury said the company’s difficulty with engine deliveries “contributed to industrial problems that we have now to digest.”

“There are a lot of airplanes to be delivered end of 2018, beginning of 2019 to recover (from) these delays,” he added.

“This is a deal with quite a lot of complexity in transitioning from the ceo to the neo ... and introduction into service of the two new variants of the A321,” he said, referring to a jet mainly built in Hamburg.

“We are in Hamburg in the phase of solving those difficulties,” he said.

Airbus shares rose on Wednesday as rival Boeing Co’s (BA.N) shares rallied after reporting upbeat profits.

Reporting by Allison Lampert, Editing by Tim Hepher and Richard Chang

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