This week, Airbus chief financial officer Harald Wilhelm said Airbus was considering raising the production rate of the A220 to more than 100 aircraft a year.
This is an announcement that seems to us to be premature at this stage of production of the A220, because we must remember that the current rate is just three aircraft per month and that even the target of 34 deliveries for 2018 might be difficult to reach. According to 2015 forecasts by Bombardier, the A220 rate should have been 60 to 70 deliveries by 2018. But the problems with Pratt & Whitney as well as with Zodiac have caused delays in the production of the A220. Airbus also has problems with these two suppliers; for example, last July 10 there were eight A350s hanging on the tarmac in Toulouse waiting for their interior finish from Zodiac which also manufactures the interior of the A220. If after three years, Airbus failed to kick Zodiac butt enough to make up for delays on the A350, it is hard to see how it could be otherwise with the A220. Before considering A220 production to more than 100 aircraft per year, Airbus should first be able to solve problems with suppliers.
For this reason, Mr Wilhelm’s statement seemed to us to be overly optimistic following the 120 orders obtained in just two weeks. But it is an article published on the site LesEchos.fr which made us understand that this declaration was not made by hazard. The article reports that Airbus formally asked several suppliers of the A220 a 20% price reduction in exchange of a volume increase. The public statement of Mr. Wilhelm, who is a senior officer of Airbus, therefore publically supports the request to suppliers that was made in private. Mr. Wilhelm’s objective was to reassure the suppliers of Airbus’ intentions with the A220. Note also that this statement is non-binding since it does not mention a timeline to establish when A220 production would increase to more than 100 devices per year or what the new annual rate would be.
Airbus has just launched a new phase of negotiations with suppliers of the A220 to reduce its cost of production. Most of them should be able to respond adequately to Airbus’ request, but it is the two or three recalcitrant suppliers who will make the headlines again.>>> Follow us on Facebook and Twitter