Airbus Slows Production Ramp-Up, Citing Virus Hit to Demand

(Bloomberg) -- Airbus SE slowed the pace of a planned ramp-up in jetliner production, after a global surge in coronavirus cases hurt demand.

Output of the A320-series narrowbody, Airbus’s most popular model, will rise gradually to 43 per month in the third quarter, reaching 45 in the final three months of the year, the European planemaker said Thursday in a statement. Previously it had targeted 47 per month by July.

The decision marks a retreat from the optimism shown as recently as October, when Airbus told suppliers to prepare for an increase in narrow-body rates in the second half of the year. Since then, fast-spreading variants of the coronavirus have sent case counts soaring across the globe.

Countries have responded by tightening border controls and airlines have pulled back on schedules, raising concerns that a hoped-for rebound in air travel by summer will take longer than expected.

Wide-body rates will remain steady, Airbus said, postponing a potential increase for the A350 wide-body. Output of the A220, Airbus’s smallest mode, will increase to 5 per month from 4 from the end of March as planned.

Faury said earlier this month that the new virus wave was creating uncertainty over the ramp-up, despite the roll-out of new vaccines that should bring down the number of cases. Airlines have been raising more funds to protect their balance sheets, as they brace for a longer downturn.

On Thursday, Dutch flag carrier KLM said it would cut up to 1,000 additional jobs because the recovery from the pandemic is taking longer than expected.

Deutsche Lufthansa AG Chief Executive Officer Carsten Spohr painted a slightly more optimistic view of the industry’s prospects on Thursday, saying vaccine programs should slow the virus spread and allow for traffic recovery in the second quarter.

Airbus reported 566 aircraft deliveries last year, a third fewer than in 2019. While handovers of wide-body jets crumbled, demand for single-aisle planes slipped only 30%.