Airbus to slash A320 monthly production rate by 50%

By:
on Apr 3, 2020
Listen
  • Airbus to reduce production of A320 from 60 per month to 36 per month for 1 to 2 quarters.
  • Airbus directs suppliers to reduce their pace of providing parts by 40%.
  • Airbus and Boeing are considering a decline in the production rate of A350 and 777.

Follow Invezz on Telegram, Twitter, and Google News for instant updates >

The Coronavirus pandemic is raising new industrial and delivery related challenges for the world’s largest airplane manufacturer, Airbus (EPA:AIR). In its announcement on Friday, Airbus said that it plans on slashing output of its A320 jetliner to combat such challenges. A320 marks Airbus’s top-selling plane series.

Are you looking for signals & alerts from pro-traders? Sign-up to Invezz Signals™ for FREE. Takes 2 mins.

As
per the sources, Airbus is expected to reduce the production of its A320
jetliner from 60 per month to 30 per month (50% cut) in the next 1-2 quarters. Via
cutting production, the company seeks to circumvent an excess of undelivered
jets as the ongoing health emergency curbs the global travel and tourism
industry and reflects significantly in the falling demand from the worldwide
airlines.

Airbus
Directs Its Suppliers To Cut Pace By 40%

Copy link to section

The
sources also added that Airbus has already directed its suppliers to slower the
pace at which parts are provided by 40% in order to match the manufacturer’s
newly set rate of producing 36 jets per month.

Airbus
is expected to make
an official announcement of its final decision before
its scheduled meeting with the shareholders in mid-April.

Airbus
was reported quoting on Friday:

“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.”

According
to Reuter’s report on Thursday, Airbus and its staunch North
American competitor, Boeing,
are also considering slashing production of
wide-body, larger aircraft like the Boeing 777 and Airbus A350 in the upcoming
weeks.

Airlines
from across the globe have recently started resorting to grounding fleets and
postponing deliveries of new aircraft as the Coronavirus pandemic brings the
global travel and tourism industry to a near halt.

Airbus
Is Slowly Resuming Operations At Its Factories

Copy link to section

Airbus
had previously suspended production at multiple factories to protect its
employees and minimize the risk of fast transmitting flu-like virus. While the
factories are slowly resuming operations, the manufacturer is still facing
supply chain disruptions and continues to struggle to recover its production
levels back to normal.

Before
Coronavirus, Airbus had plans of increasing its A320 production to 63 per month
in 2021. Due to the health crisis, the manufacturer also suspended its 2020
guidance in March.

At
the time of writing, Airbus is exchanging hands at £44.64 per share in the
stock market that translates to over 60% decline in 2020 so far. Airbus
currently has a market cap of £34.69 billion.

Manufacturing Stock Market Transport & tourism