Airbus order book sees return to form

Financial Times
By Kevin Done in Toulouse
Published: October 14 2004 20:02 | Last updated: October 14 2004 20:02

Noel Forgeard, chief executive of Airbus, said on Thursday that the group’s aircraft deliveries this year would be “close to the highest” level ever achieved by the group.

In his strongest statement yet on the European aircraft maker’s resurgent fortunes, he said deliveries were expected to rise this year to 315-320, approaching the 325 achieved in 2001, the year of Airbus’s peak output.

Mr Forgeard also indicated that Airbus deliveries were expected to rise to record levels in both 2005 and 2006 with output reaching about 350 planes next year and possibly 400 in 2006.

There would be a “double digit percentage increase” in deliveries in 2006, against 2005, he said.

The global civil aviation industry collapsed into deep recession in late 2001 in the wake of the September 11 terrorist attacks in the US, forcing Airbus to postpone its previous ambitious plans to raise output. The group is showing growing confidence that the market for civil aircraft is beginning to recover, however, and it has also been gaining an increasing share of the world market at the expense of Boeing, its US rival.

Airbus has outsold Boeing in four of the last five years (in terms of new orders) and last year delivered more aircraft than Boeing for the first time.

The increases in output currently planned and the delivery targets indicated by Mr Forgeard yesterday are likely to keep the group ahead of Boeing at least until late in the decade.

Boeing has forecast deliveries of 285 for this year rising to 300 in 2005.

Airbus announced earlier this year at the UK’s Farnborough airshow, that it was planning an increase in the output of its main seller, the single-aisle A320 family of short-haul aircraft, of up to 50 per cent during the next two years from just over 20 a month to 30 a month by April 2006. The group said yesterday that on current planning, production could rise further to 32 a month.

Production of the group’s A330/A340 wide-bodied long-haul aircraft is being increased by a third from just over six a month to eight a month by April 2005, and Airbus said yesterday it was also on track for the first entry into service of its A380 superjumbo in the second quarter of 2006.

Production of the A380 is planned to rise to four a month during 2008, and Mr Forgeard said yesterday that the group would begin booking profits from A380 deliveries in its 2007 financial year.

The group has already taken 129 firm orders for the 555-seat passenger A380, and 10 commitments that are expected to become firm orders by the end of the year, from 13 customers. Airlines have also taken options on a further 70 aircraft.

Mr Forgeard said the group would break even on the $10.7bn A380 programme with 250 deliveries. European governments would not have been repaid the $3.2bn advanced to Airbus in repayable launch aid for the A380, until the group reached 500 deliveries.

He said the group expected to receive its first order from China for the A380 during the next couple of months. “We are very advanced,” he said, and negotiations would need to be completed soon, if deliveries were to be made as planned ahead of the 2008 Olympic games in Beijing. The order would be for around five aircraft.