Airbus Goes Slow on A220 Output as Factories Near ‘Highest Risk’

Now that Airbus SE is starting to see fresh sales momentum for its sleek A220 jet, it faces a different challenge: getting the small single-aisle planes to impatient customers.

The airliner formerly known as the C Series has amassed a backlog of 480 unfilled orders under Airbus and Canada’s Bombardier Inc., which handed control of its marquee jet to the European planemaker in July after years of disappointing orders.

But it won’t be until the middle of next decade that Airbus reaches the peak production target of 14 jets a month, shared across two factories: four a month at a yet-to-be-built plant in Mobile, Alabama, and 10 at the original assembly line in Mirabel, Quebec. That’s a slower ramp-up than Bombardier envisioned in late 2017, when it said Mirabel would deliver as many as 10 of the planes a month in 2020.

Airbus is deliberately moving slowly because the transition to full-rate production is where the highest risk is, said Philippe Balducchi, chief executive officer of the A220 partnership, in which Bombardier maintained a minority stake. We’ve seen that both at Airbus and Boeing. It’s a critical stage.

Airbus inherited the factory north of Montreal last year when it assumed control of the aircraft program. Bombardier bet more than $6 billion to develop the twin-engine jet over more than a decade — more than the debt-laden company’s current market value of C$5.19 billion ($3.9 billion).

The Toulouse, France-based aerospace giant booked 135 firm orders for the aircraft in the first two weeks of January, all in the U.S. But only 57 of the jets have been delivered to customers since its 2016 commercial debut. That’s the equivalent of about a month’s output for Airbus’s A320 family of single-aisle jets.

They’ve got a medium-sized challenge on their hands,” said Richard Aboulafia, an aerospace analyst at the Teal Group. Renegotiating prices with suppliers is pretty big. Then again, these are the guys who are getting up to 60 planes per month” with the A320.

To move A220 production into higher gear, Airbus is retraining mechanics in Mirabel and eliminating out-of-sequence work by suppliers and on the factory floor. It’s also focused on extracting savings from key suppliers to trim unit costs by a significant double-digit percentage.

Source: Civil Aviation Authority