Bloomberg News

Boeing Chases Airbus Output Boost With Early Max Debut

June 19, 2013

Boeing Co. (BA:US) accelerated the planned debut of its upgraded narrow-body jet while Airbus SAS said it would boost output of a rival model as they vied for advantage in the biggest part of the commercial-aircraft market.

Boeing said today it moved up the delivery date for the 737 Max, which sports new engines, by six months to the third quarter of 2017. Airbus said it may increase A320 production by 19 percent by 2020 from 42 a month now to satisfy rising demand.

“One of the messages we are giving suppliers is they need to start thinking about rate 50,” Tom Williams, the Airbus executive vice president for programs, said in an interview at the Paris Air Show today.

Narrow-body planes are the models typically used on short-haul flights and form the backbone of the global airline fleet. Boeing predicts industrywide deliveries of those aircraft will total 24,670 during the next two decades, more than triple the haul for the wide-body jets able to fly intercontinental routes.

Airbus got a head start in offering an improved single-aisle model with the introduction of the A320neo variant in late 2010. That helped the plane reach 2,100 orders through May compared with 1,381 for the Max, the update to the long-serving 737 that Boeing offered months later.

Airbus Backlog

With the added sales of the re-engined A320neo, Airbus’s backlog for narrow-body jets has climbed to almost 4,000 planes. The next goal is lifting A320 monthly output to 44 a month in 2017, Williams said. The A320 is Airbus’s top seller and has the highest output of any commercial airliner.

Boeing’s acceleration of 737 Max delivery will help shrink Airbus’s advantage from the Neo’s earlier introduction, according to the U.S. company. The jets’ sales would have been roughly equivalent if they had been on the market for the same time, said Scott Fancher, Boeing’s chief of plane development. The Chicago-based company is increasing single-aisle monthly output to 42 by 2014 from 35 last year.

“This game is just starting. We’re in for the long haul,” Fancher said during a news conference in Paris. “We’ve got a great airplane and it’s going to do just fine.”

Boeing had built into the Max’s development timeline the possibility of an earlier first delivery, and the stepped-up tempo won’t raise production risks, Fancher said.

‘Planned Opportunity’

“This was a very deliberate planned opportunity that we’ve been able to harvest to benefit ourselves and our customers,” Fancher said.

Airbus had considered a near-term reduction in output to 40 single-aisle planes to help manage the transition from the existing model, dubbed the classic, to the new version due 2015. A spate of orders for the classic means the Toulouse, France-based planemaker can avoid a reduction, Williams said.

Suppliers to the European planemaker have at times struggled to keep pace, disrupting delivery flows. While the supply chain is better today than a year ago, it doesn’t remain without “tensions,” Williams said.

On the larger A330 wide-body aircraft, Airbus has scrapped a plan to boost output to 11 a month as the manufacturer works on the replacement A350 coming at the end of next year. The focus on the A330 is to maintain output at 10 planes for as long as possible, a level Williams said will be a challenge as the new planes approaches serial production.

Boeing is increasing Dreamliner production to 10 a month by the end of 2013 and has “significant pressure” to raise the rate further to make space for the stretched 787-10 variant, Chief Executive Officer Jim McNerney said yesterday in a Bloomberg Television interview. The bigger plane was introduced yesterday in Paris and has collected 102 commitments for orders.

To contact the reporters on this story: Robert Wall in Paris at rwall6@bloomberg.net; Andrea Rothman in Paris at aerothman@bloomberg.net; Thomas Black in Paris at tblack@bloomberg.net

To contact the editors responsible for this story: Ed Dufner at edufner@bloomberg.net; Benedikt Kammel at bkammel@bloomberg.net


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