The Supply Chain Matters blog highlights new developments related to commercial aircraft manufacturer Airbus’s plans to restore higher levels on A320 family monthly production.

 

Background

In October of last year, Supply Chain Matters highlighted for readers indications from the CEO of global commercial aircraft manufacturer Airbus that the subsequent 12 to 18 months will be the most difficult part of what this aircraft manufacturer would have to achieve to really recover from the Covid 19 impacts on airline travel and on the aerospace industry as whole.

In an interview with Bloomberg News at the time, CEO Guillaume Faury expressed confidence that the Airbus supply network would be able overcome the pandemic induced demand contractions that occurred, despite key supplier concerns. He further reaffirmed existing planning related to being able to boost the monthly production rates of the widely popular A320 single-aisle aircraft once again. The plan at the time was to be able to boost output from the existing level of 40 per month, ramping to a rate of 64 A320 aircraft per month by 2023. There was mention of potential interest is boosting monthly production to 75 aircraft per month around the mid-decade, which was noted as an unprecedented monthly output number for the industry as a whole. Even in good times.

In order to achieve these levels, especially after the severe shocks that the commercial aircraft industry endured as a result of airlines postponing or canceling existing orders, supply agreements for aircraft engines and major airframe components were considered crucial.

 

New Developments

Last week, Bloomberg Business reported that Airbus has been able to secure an 18-month extension to key engine supply contracts involving Safran SA and General Electric, along with MTU Aero Engines, a supplier of a rival Pratt & Whitney geared turbofan engine also utilized to power the A320/A321 single aisle aircraft.

The report cites the CEO Of Safran Oliver Andries suggesting that the 65 per month number would be a challenge, given the current situation of global supply chain constraints and in particular, economic sanctions imposed on Russia that are impacting supplies of titanium metal. Safran reportedly recently indicated that sanctions related to Russia, inflation and component bottlenecks will trim 1.5 percentage points from profitability levels this year.

The CEO of Pratt & Whitney’s parent Raytheon Technologies also indicated caution relative to supply chain constraints, especially in electronics.

Today, Bloomberg reported (Paid subscription or metered view) that Airbus is indeed pushing ahead with ambitious plans to ramp-up A320 monthly production levels.

According to this report, following Airbus’s initial cutback decisions, A320 family monthly production levels have now achieved a level of 50 aircraft per month. The reported plan is to now move toward a monthly production target of 65 single-aisle A320 aircraft per month by the middle of 2023.  The report further indicates that the aircraft manufacturer will construct an additional U.S. assembly line within the Mobile, Alabama facility, to help support this new goal. Added capacity investments are also being evaluated for the five other A321 family global production sites.

Airbus reportedly reiterated a forecast to produce at least 720 jetliner deliveries in 2022, even with challenges related to the Russia-Ukraine conflict and the ongoing Covid-19 restrictions occurring across major industrial regions of China.

Both reports hint that Airbus’s goal is maintain its existing industry dominance over rival Boeing in single-aisle commercial aircraft. With an existing healthy backlog of airline industry orders, the feeling is such that increased output would boost revenue, cut waiting times and perhaps spur added new orders from airlines.

 

Additional Perspectives

While such an aggressive ramp-up plan remains challenging for Airbus as well as its key suppliers in the current highly disrupted industry supply network environment, this extended supply network agreement is an obvious step to indicate intent to move toward 2023 and beyond ramp-up goals.

Meanwhile, competitor Boeing recently reported its Q1-2022 financial performance that was headlined with $14 billion in total revenue, and an overall operating loss of $1.2 billion. Existing operating cash flow remained negative, the latest being a burn rate of $3.2 billion for the quarter. While single-aisle Boeing 737 MAX production and customer delivery levels have increased, the aerospace manufacturer has yet to resume deliveries of the manufacturing and engineering troubled Boeing 787 wide aisle aircraft. Boeing had to additionally absorb over $1 billion in cost overruns related to production and design of two planned Air Force One aircraft models.