Friday, October 17, 2014

Airbus Cuts Production Plan for A330 Jetliner • Plan to Reduce Output of Widebody Jet to Nine a Month From 10 a Month

The Wall Street Journal
By Robert Wall
Updated Oct. 17, 2014 5:02 a.m. ET

Airbus Group NV on Friday cut its production plans for the A330 long-range jet in the first indication aircraft makers may struggle to sustain record output levels for some of their planes as they introduce upgraded models.

Airbus said it would reduce the build-rate for the A330 to nine aircraft a month in the fourth quarter of next year. It currently builds 10 A330s a month, a record for the company. The A330 is a key profit contributor for the European plane maker.

The Toulouse-based company is working on an updated model of the widebody, called the A330neo, for “new engine option,” due for delivery from 2017. The plane maker, which introduced the version in July, has already booked commitments for more than 120 of those jets.

Airbus and rival Boeing Co. are introducing updated models of their current jets as they seek to extend their popularity by adding new engines that are more efficient and help airline buyers cut fuel costs.

Airbus was hoping to maintain A330 production at a steady pace through the transition period. Sales for the model have slowed, though, as more efficient rivals, including the Boeing 787 and Airbus’s own A350 jet become available. The company has booked only 41 orders for the current A330 version in the first nine months. A long-pending order from China for more A330s so far has failed to materialize.

“Our role as an aircraft manufacturer is to anticipate and adapt our output to ensure we continue to maintain a smooth production flow for Airbus and for our supply chain,” Airbus executive vice president for programs Tom Williams said in a statement.

Boeing currently is in the process of trying to sell current model 777, the largest twin-engine long-range jet available, to sustain production at record pace as it moves to the updated 777X version at the end of the decade. Boeing builds 777’s at a rate of 8.3 jets a month. Most of the 261 net orders Boeing has booked this year for the 777 are for the new version.

Aircraft makers often struggle selling the last aircraft of a type that aren't as popular because they are less efficient than the replacement.

With their single-aisle jet programs, the backbone of global flying, Airbus and Boeing appear to be succeeding in efforts to bridge from their current types to upgrades models. Airbus is upgrading the A320 with new engines and Boeing is doing the same on the 737.

Boeing said this month it would hike 737 output to 52 aircraft a month in 2018 from 42 today. Airbus also has announced it would boost output to 46 A320s in 2016 from 42 today and may go further.

Airbus chief plane salesman John Leahy said last month the company next year may decide to hike output for the A350, its newest long-range jet. Demand is strong enough to warrant going beyond the planned rate of 10 planes a month in 2018, he said.

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