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Airbus won't deliver fewer than 25 A380 a year: CEO in paper

An Airbus A380 plane takes off during a demonstration flight at the MAKS International Aviation and Space Salon in Zhukovsky, outside Moscow
An Airbus A380 plane takes off during a demonstration flight at the MAKS International Aviation and Space Salon in Zhukovsky, outside Moscow

By Tim Hepher and Cyril Altmeyer

PARIS (Reuters) - Airbus kept its 2013 goals for the A380 despite a dearth of orders, but struck a more cautious note for future years, saying it would not on average deliver fewer than 25, which is below the level built into its longer-term financial targets.

Chief Executive Fabrice Bregier told a French newspaper Airbus would both sell and deliver 25 of the world's largest passenger jets in 2013, meeting its targets.

"We will deliver 25 this year," Bregier told Les Echos. "I have no intention of dropping below this rate in the years to come. The question is whether we will be able to increase sustainably to 30 aircraft (a year).

"The target of reaching breakeven on the program in 2015 is based on that rate (30). At 25 a year, this target would be harder to reach, but on a scale that would still be marginal."

Airbus parent EADS told analysts in May that it aimed to bring the loss-making plane to breakeven point in 2015 based on an average delivery rate of 30 aircraft a year.

An Airbus spokesman said A380 targets had not changed.

Deliveries have been held in check this year as Airbus installs a permanent fix to the recent problem of wing cracks on the huge double-decker jet, which entered service in 2007.

But analysts say it must on average deliver 30 a year to reach its breakeven goal for the program in 2015, or else cut costs further and push the breakeven threshold below 30.

Industry sources told Reuters last week that Airbus planned to carry out a review of its flagship jet due to slow sales and had not ruled out shaving A380 output to avoid gaps in 2015 when a handful of the jets remain unsold.

They also said the review would examine other possible long-term options including making the 525-seat jet even bigger to reduce unit costs amid competition from large twinjets.

Parts for the A380 such as strong metal forgings have to be ordered up to two years ahead, meaning time is running out for a decision on output in 2015, which is the critical period for EADS financial targets concerning the aircraft.

FINE-TUNING

A union source said the upstream production rate of 2.8 per month - or 30 planes annually based on an 11-month industrial calendar - had already slipped slightly in the past two weeks.

"We fine-tune our production on a monthly basis; we have done so successfully in the past and will do so in the future," an Airbus spokesman said when asked about the union comment.

Executive Vice President Tom Williams told Reuters last week that small variations in production would "not be a crisis" and ruled out allowing factories to produce A380s that were unsold.

In a bid to boost A380 sales, Airbus has formed a marketing partnership with Doric Lease Corp which has placed a provisional order for 20 superjumbos. Industry sources say the race is on to finalize the order, possibly at next month's Dubai Airshow.

However, the venture only takes effect in 2016.

In the newspaper interview, Bregier also confirmed that Airbus may opt to stretch the A380 some time next decade, but said the current version suited the majority of airlines.

"Personally, I think the A380 program will have a stretched version, maybe in 10 or 15 years from now," he said.

Bregier reaffirmed the main EADS financial target of reaching a 10 percent margin in 2015 excluding the new A350 program, which he said was going according to plan.

He said Airbus would maintain production of narrowbody A320 planes at 42 a month to ease pressure on the supply chain and ensure a smooth transition to a new version due to enter service in 2015.

(Editing by Leila Abboud and James Regan)

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