Salem Radio Network News Thursday, December 2, 2021

Business

Airbus rebuffs lessor complaints over plans to lift jet output

By Tim Hepher

PARIS (Reuters) -Airbus has rebuffed calls by aircraft leasing firms to temper plans to almost double production of its best-selling A320 jetliner family, telling them its ambitions are justified by expectations for post-COVID demand, industry sources said.

Major lessors have joined engine makers in warning Airbus that an aggressive output hike could upset the market and hurt airplane values when the recovery remains fragile.

The latest approach came in separate letters to Airbus from at least two of the world’s largest leasing companies, the sources said, confirming a Financial Times report.

Airbus has responded that it is sticking to its plans, which involve a firm target of 64 A320-family jets a month in the second quarter of 2023, along with studies to raise monthly output to 70 in early 2024 and 75 by 2025, from about 40 now.

It told leasing companies that complained about the plans that “demand is there,” a person familiar with the matter, speaking on condition of anonymity.

“We continue to work on our commercial aircraft production ramp-up in line with the planning communicated in May 2021,” an Airbus spokesperson said.

Lessors AerCap and Avolon, which are reported to have written to Airbus, were not immediately available for comment.

The exchange deepens a row over the speed of recovery from a coronavirus travel slump that led to thousands of planes being grounded in the past year.

While most analysts agree any recovery will benefit small jets like the A320 and Boeing 737 first, the dispute focuses on whether it makes sense to hike output sharply before a glut of parked jets has returned to service, a step needed to rescue their earning potential for lessors and engine makers.

Airbus says its demand forecasts are based on verified contracts and that the supply chain needs transparency over its future production plans to finance future capacity.

However, it has yet to reach agreement with its suppliers over the most ambitious part of its plan.

“There is no agreement beyond 64; discussions are still happening,” one supplier said. Another cautioned that even those output levels must confront new challenges over scarce labour.

(Reporting by Tim Hepher; Editing by Kirsten Donovan and Barbara Lewis)

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