Bloomberg News

Airbus Sees Profit Focus as Upgrades Supplant New Models

June 12, 2014

Airbus Chief Executive Officer Fabrice Bregier said he’s focused on profitability as he embarks on an extended period of improving existing planes instead of new models that have consumed billions in development.

With the all-new A350-900 wide-body just months away from commercial service, Airbus will upgrade the A320 single-aisle model, consider a similar overhaul to the popular A330 and seek to break even with its A380 superjumbo by next year, Bregier told journalists in Toulouse, France, where Airbus is based.

“We’re looking at profitability,” Bregier said at a dinner during a two-day seminar to showcase Airbus products and strategy. “At the end of the decade we will have not only the A320 and the A330, but also the A350 very profitable. For the A380, our goal is break-even. If we have that, then the financial challenges for Airbus will be met.”

Bregier’s upbeat outlook came under strain this week when Emirates, the largest buyer of the a380 double-decker, canceled its entire order for the A350 valued at $16 billion, in a blow to Airbus’s most innovative aircraft and endorsement of the competing Boeing Co. (BA:US) 777X, which is due by the decade’s end. Bregier said the loss has no financial impact, adding Emirates may come around to the aircraft again at a later stage.

Promotional Flight

Airbus expects certification by the end of third quarter, with entry into service with Qatar Airways Ltd. by year-end. Airbus won clearance from regulators to invite 160 journalists on the aircraft for a one-hour spin over the snow-covered Pyrenees, highlighting how much the program has advanced.

The A320neo, a new version of the A320, is set for first flight by the end of the next quarter, with entry into service in 2015. Planes will be assembled in Toulouse and Hamburg, as well as in Tianjin in China and in Mobile, Alabama, where Airbus is opening a plant to help win more business across the Atlantic.

The 20 year-old A330 wide-body, coming off production lines at 10 a month, may get more fuel efficient engines, an upgrade Airbus is still considering, according to Bregier. Such as move would help the company better position the model against Boeing’s more advanced 787 Dreamliner, while luring customers with a lower price tag than its rival’s marquee jet.

Bregier said many customers that like the A330 are approaching the manufacturer requesting new engines to bring down fuel costs, typically an operator’s single biggest expense.

“We are looking at all the parameters and when we ready to take the decision -- yes or no -- we will let you know,” he said.

To contact the reporter on this story: Andrea Rothman in Toulouse at aerothman@bloomberg.net

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


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