Airbus is holding a meeting later this week, with one of the topics up for discussion reported to be the ongoing production rate of its popular narrowbody, the A320. Although the planemaker had cut production by around a third last month, further cuts could be on the table as a more L-shaped recovery is predicted.
A320 production rate at risk
According to reporting in Bloomberg, Airbus could be eyeing further production rate cuts with a meeting to discuss the matter slated for this week. The planemaker could look to make cuts to the output rate of its popular A320 narrowbody jet, as demand for new aircraft is predicted to remain sluggish for some years to come.
Airbus previously cut production of many of its range of aircraft for the rest of 2020. These cuts included a reduction in A350 output of 40%, the A330 production reduced by around 33% and the A320 cut by about 33% also.
However, previous reports had suggested that a cut in the A320 production of as much as 50% could be on the cards. Previously produced at a rate of 60 per month, Airbus had planned to increase this to 63 by the end of 2020 and to 67 by 2023. The A380s production line was being repurposed to support this higher rate.
Now, it looks like fresh cuts could be on the table if the planemaker predicts a more L-shaped recovery rather than a V. A V-shaped recovery would point to rapid decline (as has been seen) followed by rapid recovery. However, most airlines around the world are already planning for a much slower recovery, with the majority predicting that 2019’s travel demand will not return until at least 2023.
Airbus’ best-selling jet
The A320 is Airbus’ best-selling plane, and since the release of the neo version of the narrowbody, it has been where the planemaker has focused the majority of its capacity. In 2019, it produced 551 A320neo, a massive jump from the 386 in 2018.
With almost 800 orders secured in 2019, the A320neo backlog was expected to carry Airbus through to 2025, even at increased production rates. However, the impact of the COVID crisis has left Airbus wondering about the future demand for the type and may lead it to further adjustments of the rate.
In April, Airbus received just nine orders for the type, all from leasing firm Avolon. Of its 14 deliveries in the month, 12 were of the A320neo family. However, with airlines looking to defer deliveries and unlikely to place more orders soon, it would make sense for the planemaker to lift off the accelerator on its production lines for a while.
While so far, the manufacturer has not laid any workers off, that could be another area for discussion this week. Thousands of workers have been furloughed to date, and the planemaker warned of “deep cuts” to its workforce last month.
What about the A220?
So far, there has been no indication that production rates of the A220 could be at stake. The manufacturer previously said it would slow the planned ramp-up of production of the type, but has pressed ahead with the opening of its new production facility in Alabama.
With a lower capacity than the A320 and unrivaled economics, the A220 could well be a more popular option as airlines begin to recover from the crisis. Latvian airline airBaltic is coming back from the crisis an all-A220 operator, and US airline JetBlue is still committed to taking its first A220 later this year.
As such, Airbus’ recovery could well hinge on the A220. We’ll know more following the meeting later this week.