Airbus weighs sharp cut in A320 series plane production over virus crisis: Sources

Reuters , Friday 3 Apr 2020

Airbus weighs sharp cut in A320 series plane production over virus crisis (File photo: Reuters)

Airbus is studying a sharp cut in output of its top-selling A320 plane series in light of industrial and delivery challenges posed by the coronavirus crisis, four people familiar with the matter said.

Airbus (AIR.PA) may have to cut its official monthly rate of 60 A320-family jets by as much as half for one or two quarters, two of the people said, to avoid a glut of undelivered jets.

Suppliers have been asked to slow their stream of parts by 40% to a rate compatible with production of 36 jets a month in the near term, one of the sources said .

A final decision is expected before the company’s shareholder meeting in mid-April.

Airbus said in a statement it was “closely monitoring the evolving COVID-19 situation worldwide and is in constant dialogue with ...customers, suppliers and institutional partners.”

“Airbus is in the process of assessing the implications of the pandemic on its operations and the potential mitigation measures that could be implemented. The company will not provide further comment at this stage.”

On Thursday, Reuters reported that both Airbus and Boeing (BA.N) were also studying sharp cuts in production of larger, wide-body jets such as the Airbus A350 or Boeing 777.

Airlines worldwide have grounded fleets and stopped taking deliveries of most new aircraft due to cash shortages and travel restrictions that have both hurt travel demand and interrupted the logistics of sending inspectors and pilots to collect new jets.

At the same time, Airbus faces shortages in its own supply chain as it struggles to bring production back up to previous levels after pausing activity in several factories.

Airbus entered the coronavirus crisis with plans to increase A320-family production to 63 a month next year and to add a further 1-2 planes per month in both 2022 and 2023.

Those plans have been shelved, the sources said. The company suspended near-term 2020 delivery guidance last month.

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