Airbus Optimistic But Reduces Production

Airbus had a successful year in 2008 but, like most aviation industry participants, the company is taking a conservative and cautious approach to 2009–2010. During 2008, the company delivered 483 aircraft and took gross orders for almost twice as many, the 900 extra orders taking the year-end order backlog to 3,715 aircraft.

Numerically speaking, the mainstay of the Airbus line is the A320 family (A318, A319, A320, A321) and the company delivered 386 of the single-aisle airliner family in 2008. Airbus now has an accumulated backlog of more than 2,450 A320 family aircraft and although this represents more than six years of production, from October 2009, Airbus will be taking the cautious step of reducing production to 34 units per month—down from the current rate of 36. The company sees itself as fortunate in having such a substantial backlog to maintain production throughout its facilities, but until the economic situation returns to steady growth, it will be minimising its exposure to the uncertain market.

John Leahy, Airbus’s Chief Operating Officer (Customers), was particularly positive about the medium-term market prospects when he addressed the 2009 Airbus Innovation Days (formerly the annual technical press briefing) at the company’s Hamburg facility. Quoting three months of consecutive rises in the US business confidence index and a rise of around 4% in real GDP growth, Leahy predicted a worst-case scenario of air-traffic growth not rising above 0% until the beginning of 2010 and a best-case scenario of exceeding that 0% barrier by mid-2009. Leahy stressed that, historically, air travel has doubled every fifteen years, irrespective of short-term fluctuations due to global economic factors. He also pointed out that, despite the challenges faced by the industry as a whole, cancellations out of Airbus’s existing order backlog are sitting at around only 3%.

Airbus’s CEO, Tom Enders, sounded slightly more circumspect, but said he couldn’t argue with the data on which Leahy was basing his estimation. At worst, Enders felt that the time-frame for the recovery might be slightly longer than Leahy suggested. The consensus among senior Airbus personnel was that the downturn appeared to be at or near the bottom of the trough and they were expecting a steady recovery to begin in the relatively near term.