Airbus Aims To ‘Significantly’ Cull Aircraft Inventory by Year-end

 - July 30, 2020, 9:55 AM

Airbus is not providing a forecast for 2020 deliveries or produced aircraft that could remain undelivered to customers, but executives have expressed confidence that the company would clear most of the inventory by the end of the year. The European OEM on June 30 carried a stockpile of 145 commercial aircraft, unshipped because of the pandemic. Speaking during a first-half results call with analysts on Thursday morning, Airbus CEO Guillaume Faury said the company would “significantly” reduce the inventory by the end of the year thanks mainly to what he called the convergence of production and deliveries.

“Our objective is to get rid of the vast majority of the inventory by the end of the year,” he said. Faury declined to give guidance on the year-end number of undelivered aircraft because of uncertainty around Covid-19 and “the number of airlines with whom we keep adapting the situation to their needs and their own situation.” The “very vast majority” of aircraft remain undelivered for just a couple of months, he added, "though there are a fewer number of cases where the situation is critical and where we are preparing ourselves to store the aircraft for a longer time.”

The airframer delivered 196 commercial aircraft in the first half—11 A220s, 157 A320 family aircraft, five A330s, and 23 A350s—resulting in a 50 percent drop from the year-ago period. To adapt for the Covid-19 market environment, Airbus in April cut its production rates by about a third, including to 40 A320 family aircraft per month from a peak of 60 in 2019;  A330 rates dropped from some 3.25 per month to two per month and A350 rates fell from roughly 10 per month to six. Based on its projections that the widebody market will take longer to recover than the single-aisle segment, Airbus on Thursday announced it will again reduce the monthly output of its A350, from six aircraft to five. Conversely, it believes the rate of 40 A320s per month provides for the right balance between supply and demand. “There might be some small adjustment, but we will keep it for the second half of 2020 and entering into 2021,” said Faury, adding that a production ramp-up of the single-aisle “potentially could start in the second half of 2021, and it is very likely it will happen in 2022.”

Faury said he believed aviation will remain a strong business long-term. “We will see again a very strong demand when demand recovers,” he said, though he cautioned that air traffic won’t likely return to its 2019 level until somewhere between 2023 and 2025.