By Lina Saigol
Airbus on Thursday outlined plans to increase production of its popular single-aisle passenger jets, signaling recovery for the aviation industry, which has been battered by the COVID-19 pandemic.
Shares in Airbus jumped more than 6%, after the European plane maker said it would increase production of its A320 family of aircraft from the current rate of 40 jets a month to 45 a month by the end of this year , and called on suppliers to prepare for a new target of 64 a month by the second quarter of 2023.
“The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus Chief Executive Guillaume Faury, in a statement, adding that his message to suppliers would provide “visibility to the entire industrial ecosystem to secure the necessary capabilities and be ready when market conditions call for it.”
In anticipation of a continued recovering market, Airbus said it is asking its suppliers to “enable a scenario” where it can produce 70 single-aisle jets a month by the first quarter of 2024. “Longer term, Airbus is investigating opportunities for rates as high as 75 (a month) by 2025,” the company said in a statement.
Analysts at Jefferies described the higher output targets as “punchy production plans” in a research note to clients on Thursday, adding that the main surprise was the A320 target of 64 a month by the second quarter of 2023.
Along with its U.S. rival Boeing /zigman2/quotes/208579720/composite BA +5.58% , Airbus last year cut back production of both single and twin-aisle aircraft by between a third and a half, as global fleets were grounded in April 2020 due to the pandemic, forcing many airlines to delay accepting new jets.
Airbus /zigman2/quotes/200706109/composite EADSY +1.92% /zigman2/quotes/208224336/delayed FR:AIR -0.80% shares were trading 6.28% higher at €103.82 on Thursday in Paris. The stock has risen 15.21% so far this year, according to data from FactSet. Shares in engineering company Rolls-Royce /zigman2/quotes/203646520/delayed UK:RR -0.55% gained 3.84% in London.
The Toulouse, France-based company also plans to increase production of its small, single-aisle A220 from five a month to six by early 2022, and 14 a month around 2025. It expects monthly production of its larger A350 jet to rise from an average of five a month now, to six by the autumn of 2022, reflecting the slower expected recovery in long-haul travel.
The wide-bodied A330 family is excluded from its higher production targets, and will stay at two a month, Airbus said.