February 27, 2013
Airbus might need more production capacity for the A350, but the company has not yet made a decision, EADS CEO Tom Enders said at the company’s annual news conference in Berlin. “If we see the need for additional capacity, we will look at the business case and then decide.”
Airbus Chief Operating Officer Customers John Leahy initially raised the issue when presenting Airbus’s Asia outlook in Singapore. “I’m happy to hear from John that he is bullish about the A350,” Enders said jokingly. He conceded that the program is still “inherently risky, particularly in the phase ahead of us” and “that there is no room left in the schedule.”
Enders said that quite a few airlines have commended Airbus for going back to nickel-cadmium batteries on the A350s, given the current Boeing 787 grounding caused by lithium-ion battery fires. He described the decision as a de-risking effort. “We have always had a Plan B because we knew it was new technology. We de-risk our program as much as we can,” he said. Airbus is already facing serious challenges with the A350, which is two years behind the 787, and flight testing is only starting. Enders pointed out that Airbus has not ruled out putting lithium-ion back into the A350 in the future. “We don’t have the same supplier; it is a different chemistry.”
Referring to slow sales of the Airbus A380, Enders noted that “we need to sell more and we will.” He pins hopes on gaining more orders in Asia from new and existing customers and says that the sales team is “adequately incentivized” to push for more A380 orders. While not committing to a target for 2013, Enders said it “should not be too difficult” to exceed the 2012 performance, when Airbus sold just four of the aircraft.
Only 25 A380s are scheduled to be delivered in 2013, which has a dampening effect on EADS’s overall sales growth. But that revenue growth is expected to pick up in 2014 along with higher A380 output. Airbus slowed A380 production last year as a result of the wing rib feet cracks. European Aviation Safety Agency (EASA) certification of the permanent repairs for the in-service fleet are expected soon, but the modified new production wings are not expected to be cleared until the year-end.
Enders does not yet see a price war in the competition between the Airbus A320NEO and the Boeing 737 MAX, but “it is pretty obvious our competitor is desperately trying to catch up with our successful NEO.” EADS CFO Harald Wilhelm said there is some evidence of irrational pricing in some campaigns and Airbus might react on a case-by-case basis.
EADS expects about 700 Airbus orders this year and 600-610 deliveries. Airbus reached 914 gross orders (833 net) in 2012 and delivered 588 aircraft.