Bloomberg News

Airbus Developing ‘Stretch Marks’ as Supplier Strain Hurts Sales

September 04, 2012

Airbus Developing ‘Stretch Marks’ as Supplier Strain Hurts Sales

Airbus is adding single-aisle assembly capacity in Mobile, Alabama and is in talks with China to extend the lifespan of a facility in Tianjin by a decade. Photographer: Nelson Ching/Bloomberg

Airbus SAS (EAD), the largest maker of commercial aircraft, faces the dilemma of overstretching suppliers to boost single-aisle output or losing sales to Boeing Co. because it can’t produce its bestseller fast enough.

Airbus has been forced to cap production for A320 planes at 42 a month instead of moving to 44, Chief Operating Officer John Leahy said in London, where he issued a long-term market forecast today. The strain on the supply chain may limit how many of the updated A320neo aircraft can be made from 2015.

Airbus and Boeing rely on their single-aisle models for the bulk of sales, with Airbus predicting today that the segment will make up 19,500 planes by 2031, or 69 percent of the total. Both companies have upgraded their best-selling models with more fuel-efficient versions, as they seek to extend the planes’ lifespan and lock out competition.

“We’re getting stretch marks at the seams,” Leahy said in an interview, as Airbus struggles to even achieve 42 single- aisle planes a month by the end of this year. “Our supply chain doesn’t seem capable of getting to 44.”

With more than 1,400 orders for the A320neo, Leahy said he’d like to see a faster ramp-up of production to satisfy demand for the fastest-selling plane in aviation history. The sales chief said he could easily imagine Airbus delivering more than 50 A320neos once the plane hits full production.

“The lack of slots is definitely affecting sales,” he said.

Adding Capacity

Airbus is adding single-aisle assembly capacity in Mobile, Alabama and is in talks with China to extend the lifespan of a facility in Tianjin by a decade. Talks to continue building single-aisle aircraft there beyond 2016 will take several months to wrap up, Leahy said. The company now assembles the aircraft in Toulouse in southern France and in Hamburg.

In the next 10 years alone, there is demand from airlines for 3,200 single-aisle aircraft for which no orders have yet been placed, Leahy said.

Growth is being driven by India and China, and the latter will become the largest market by value for aircraft in the next two decades, Leahy said. While China will need the same time to become a credible manufacturing competitor, the country will ultimately get there after committing “billions” each year to create a domestic aircraft industry, he said.

The global market will double to 32,550 passenger aircraft by 2031, and about 10,350 in-service airliners will be replaced, Airbus said today. The target compares with Boeing (BA:US)’s July forecast for 34,000 planes valued at $4.5 trillion, including 2,020 regional jets that Airbus does not count.

The market for very large aircraft is one area where the two aircraft maker’s forecasts have differed. While Airbus predicted today that demand will reach 1,710 units, or $600 billion in value, Boeing estimates less than half that amount, at 790 units. Airbus offers the A380 double-decker in that segment, while Boeing sells its 747-8 jumbo.

To contact the reporter on this story: Robert Wall in London at

To contact the editor responsible for this story: Benedikt Kammel at

Toyota's Hydrogen Man

Companies Mentioned

  • BA
    (Boeing Co/The)
    • $126.23 USD
    • 0.56
    • 0.44%
Market data is delayed at least 15 minutes.
blog comments powered by Disqus