Airbus outlook brighter as aircraft maker to ramp up production of A330
Airbus Group yesterday partially reversed plans to reduce production of its profitable A330 aircraft, easing the delicate transition to a newer model as analysts said the outlook for the European plane maker was healthy amid a record order book and rising profits.
Europe’s largest aerospace group said 2015 operating earnings before one-off items rose 2 per cent to €4.13 billion (Dh16.63bn) as revenue gained 6 per cent to €64.45bn. Analysts were on average predicting core profit of €4.11bn on sales of €64.73bn.
Airbus said it expected stable underlying operating profit and cash flow this year. For 2015, it posted free cash flow of €2.8bn, including €1.7bn from the proceeds of the sale of a stake in Dassault Aviation.
“At the moment Airbus looks well set in terms of both orders and delivery plans across the narrow body and wide body space, so much so they are looking at ramping up production rates for narrowbodies in the near future,” Peter Morris, the chief economist at the UK aviation consultancy Ascend, told The National.
Tom Enders, the Airbus Group chief executive, said yesterday: “We have now decided to increase the A330 production rate back to seven aircraft a month in 2017.
“We remain focused on programme execution and managing the challenges we face with the acceleration of the A350 … and A320neo transition.”
Mr Morris said: “There are always challenges as an aircraft manufacturer, and of these perhaps the management of the transition from the current generation production to new generation aircraft production will be one to watch.”
Airbus said group order intake in 2015 was €159bn, with the order book value reaching a record €1.06 trillion as of 31 December 2015 versus €858bn to year-end 2014.
Demand for the A330 remains resilient with 136 orders across 2015 even alongside the transition to the new A330neo new engine option wide body twin engine.
John Strickland, the director of JLS aviation consultancy, said the jury was still out on the longer-term appeal of the company’s huge A380, given airlines’ increased appetite for efficiency over size.
Production of the world’s largest passenger jet has started to slow to match lower deliveries as Airbus struggles to find buyers amid a shift in demand towards smaller long-haul jets.
Mark Martin, the chief executive of Dubai’s Martin Consulting, said the aircraft maker had had a difficult time with its larger planes.
“Airbus has had a rough 36 months with Emirates and a few more backing out from their commitment from the A350, and the A380 being unsustainable with most networks,” he said. However, Mr Strickland said the range of the plane maker’s offerings was a plus.
“Airbus has a diverse product portfolio. While there is much discussion on the challenge of selling additional large A380s, its clear that airlines are hungry for smaller fuel efficient long-haul aircraft in the portfolio like the A350 and similarly in the short-haul market, demand for the next generation A320 neo is equally buoyant.”
Nonetheless, Mr Morris said there were hurdles to be negotiated for the French company.
“There have been some teething problems seen with the Pratt & Witney GTF engine for the A320neo, and they will hope to solve these as soon as possible.
“That engine is a requirement for a substantial proportion of neo production.
Mr Martin said African and South East Asian carriers had given Airbus a boost.
“The recent commitments and orders from Ethiopian airlines, Philippine airline and a few sin China has helped Airbus.”
Philippine Airlines (PAL) ordered six wide body Airbus jets worth about US$1.8bn at list prices last week.
The carrier said it will start taking delivery of the Airbus A350-900 jets in two years.
“Africa and South East Asia will give Airbus the production boost it needs to maintain revenue projections,” said Mr Martin.”
For the world’s biggest passenger jet, Mr Morris said the future was by no means assured.
“On the horizon is a decision about an A380neo, clearly requested by Emirates as the major user,” he said, adding the challenge remained “in terms of potential demand levels and a commitment from an engine manufacturer”.
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