Not so, says Airbus.
The investment bank was commenting on supplier Hexcel.
Recent Checks Suggest Slower A350 Ramp – Our latest checks indicate that Airbus (as of March 2016) targets 95 and 116 A350 “station 50” assemblies in C17-18E, respectively, vs. the earlier plan (circa November 2015) to reach 104 and 137 assemblies in C17-18E. (For context, “station 50” is where the aircraft wings are adjoined to the body of the plane.) In C16E, the A350 “station 50” target hasn’t changed much (now 70 vs. the prior plan of 69). For context, HXL generates $5MM of sales per A350. Given lead times, this suggests potential for a 2% sales reduction to consensus C17 estimates, and as much as 3-4% to C18E Street estimates. The A320 and A400M Airbus programs had minimal schedule changes in the schedule update, while A380 (3 fewer in C17) and A330 (13 more in C17) targets were tweaked.
The figures are 9% and 15% lower in the two years. However, the higher numbers appear to be more ambitious than Airbus has publicly set previously as its target production rates. Airbus said its goal for production is 10/mo by 2018, although the production capacity is 13/mo.
“Nothing has changed for us,” says an Airbus spokesman. “As we have said on the record, we plan to deliver at least 50 A350 aircraft in 2016 and will then gradually ramp up to rate 10 by the end of 2018.”
|Inferred Monthly Production Rate|
The data appears to give some look into how Airbus wanted to more aggressively ramp up production of the A350 than previously indicated. Sales of the A350 have been negatively impacted by the absence of production slots (a similar problem for Boeing at times). Boeing is ramping up production of the 787 to 12/mo this year and 14/mo before the end of the decade (we believe it will be in 2018). The A350, which truly competes with the Boeing 777 and not the 787, nonetheless lags the Boeing wide-body production plans, which do dip as 747-8 production declines to 6/yr from September and 777 Classic production to 7/mo from 2018.
The Cowen notes there will be three fewer A380s next year (no surprise) but 13 more A330ceos, the airplane that competes with the 787.
An Airbus spokesman said the Cowen numbers “(while I’m not confirming them) look absolutely consistent with the rates we already have announced.”
Boeing announced revised 747-8 and 777 production rates in January, lowering each. Airbus said it will increase the rate of the A330ceo from 6/mo to 7/mo. These slightly revise LNC’s production rate forecast through 2020. Rates for the A320 and 737 remain as previously forecast.
Airbus and Boeing now will produce about the same number of wide-bodies going forward. Rates on the single-aisles will seesaw back and forth slightly, with different effective dates for rate hikes. Deliveries are another matter. Boeing is still burning off stored 787s (the Terrible Teens), which will pump deliveries this year. 737 delivers will be down slightly this year as the transition to the MAX takes effect, but the production of these airplanes this year will see a boost in deliveries next year.
Airbus deliveries of the A320neo and A350 are negatively affected by supplier challenges. Airplanes are piling up in Toulouse and Hamburg, but should catch up by year-end. The A330neo is planned to enter service in December 2017; we think it likely these few slip into 1Q2018, based on history.
Airbus’ first quarter earnings call is April 28.