The first in a series of reports from the EADS media day and the Paris Air Show…..
Airbus will deliver about the same number of airplanes this year as it did in 2008–roughly 480–but the numbers for 2010 and “perhaps” 2011 are much less certain, said EADS CEO Louis Gallois and the company’s annual media day June 13.
Gallois term the delivery picture for 2010/11 doesn’t have much visbility and the situation is “critical” compared with 2009.
Recovery for the airline industry is tied to the global economy, which remains uncertain. The financial picture for airlines is “improving” but still “difficult,” Gallois said.
EADS’ focus is on efficiencies that protect the 8.5bn Euro cash position, which means purchasing US companies–a key part of its business plan only two years ago–remains on hold. The Power8 program implemented by Airbus two years ago at the height of the A380 cash crunch and production debacle had the effect of giving EADS a two-year head start on dealing with the current economical crisis, however unintentionally.
Gallois told us one-on-one that EADS has a goal of generating US$10bn in revenue annually by 2020 exclusive of Airbus (EADS total revenue is $80bn).
The A400M, now part of Airbus Military, remains a huge drag on EADS. The company spends $100m a month on this troubled program.
Gallois also said Airbus has the flexibility to reduce production rates on the commercial side more than what was announced earlier this year.
In a separate presentation, Airbus CEO Thomas Enders tried to tamp down forecasts by Airbus suppliers that Airbus will reduce production significantly more next year. Several suppliers–and we’ve talked to some–suggest that Airbus (and Boeing) will reduce A320 (and 737) rates to the 25-28 range (and one suggests even lower). Airbus at its Innovation Days not only said it plans to maintain A320 rates at 34/mo from October, it is already studying ramping up to 40/mo by the end of next year.
Enders said the A320 oversales for 2009 is gone but exists in 2010 and is even greater in 2011, supporting its future production projections. Enders said it is a challenge to keep the suppliers in line.
Enders also said that the Airbus backlog of 3,500, or seven years of backlog, is sufficient that Airbus could have 500-1000 cancellations and it wouldn’t hurt the company–in fact, it would open up sales opportunities sooner. But he wasn’t suggesting that he expected this number.