PARIS/WASHINGTON, Oct 26 (Reuters) - Airbus was
forced for the second time in as many days to defend sharp
increases in production, after one its engine makers said it did
not expect to support plans for a near-twofold increase in the
output of A320 jets by 2025.
The exchange with the world's largest aerospace supplier,
Raytheon Technologies, comes after Airbus on Monday
rejected worries about overproduction from leasing companies.
Engine makers and lessors rely on the attractiveness of
existing planes to support their repair revenues or rental fees,
putting them naturally at odds with planemakers who make money
on new jets. But the balancing act between contrasting business
models has erupted into growing tensions since the pandemic.
Raytheon Technologies Chief Executive Greg Hayes said on
Tuesday he was skeptical the market would support proposals to
lift A320-family output to 75 a month by 2025 from some 40 now.
Rival Boeing is lagging behind Airbus after a safety crisis
over its 737 MAX but suppliers say it is aiming for output of 50
or more MAX a month, beyond its current target of 31.
"The question is are we really going to see a market that
will support, call it 50 737s and 75 A320s on a monthly basis or
125 airplanes a month," Hayes told analysts.
"We'll be ready to support Airbus, our customer, if indeed
it does. But I would tell you that our plans, our 5-year plans,
do not anticipate getting to that kind of rate by 2024 or 2025."
Asked about the comments, Airbus Americas Chief Executive
Jeff Knittel - a former leasing industry veteran - said: "Greg
and I have had some very direct discussions about that and I
would respectfully disagree at this point."
Speaking at a jet delivery, Knittel told CNBC: "Customers
are asking us to bring airplanes forward, not push them out. To
accommodate customers, to ensure that we have airplanes
available, in our view ramping up is an important next step. The
speed of that is the question, not whether we need to ramp up."
Raytheon Technologies owns Pratt & Whitney, one of two
engine suppliers on the A320 family.
The head of one of the partners in the plane's other engine
supplier, General Electric, backed "near-term" goals at
Airbus and Boeing but declined comment on discussions being held
behind closed doors on Airbus' long-term plans.
GE co-owns engine maker CFM with France's Safran.
In May, Airbus announced a firm target of increasing
A320-family production to 64 a month by second-quarter 2023 and
asked suppliers to enable a "scenario" of 70 by first-quarter
2024. It also said it was investigating rates as high as 75 by
On Monday, Airbus pushed back against criticism from leasing
companies about the output plans.
"The key to all this is that we have these firm contracts
with our client - we cannot say that we are not going to
respect those contracts because we think they are too many for
the business," said its Latin America head, Arturo Barreira.
Airbus Chief Executive Guillaume Faury is expected to face
questions from investors over the rift at earnings on Thursday.
The company has said it is confident of a rebound in demand.
(Reporting by Tim Hepher in Paris, Mike Stone in Washington,
Additional reporting by Rajesh Kumar Singh in Chicago; editing
by David Evans and Nick Macfie)