Based on Airbus’ latest thinking that single-aisle demand will return sooner than expected, the OEM is resuming preparatory work for a new narrowbody final assembly line in Toulouse to be operational by the end of 2022.
The move is part of a broader initiative to regain momentum for single-aisle production that is planned to rise more steeply in 2022. Production could increase to a rate of 53 aircraft per month toward the end of next year. That is still short of pre-pandemic rates above 60 and earlier plans to go even higher over the following years, but still shows Airbus’ bullishness in the narrowbody market.
In parallel, the company is shaking up management of its Canadian operation to gain traction in reducing A220 production costs after sales have already been improved.
The new Toulouse line will not provide additional overall production capacity for the manufacturer. Instead, it will replace one of the two legacy lines which will be phased out. Airbus had announced the project at the beginning of 2020 but then shelved it to cut down on investment as the pandemic unfolded.
Airbus released few technical details. Both A320neos and A321neos will be built on the new line but the main reason why the decision was made in the first place was to get additional capacity for the A321neo. Of the original 8,047 A320 family orders, 1,791 were for the A321—a share of 22%. Yet the picture has drastically changed for the Neo family. Airbus has secured a total of 7,398 orders for it with 3,473 for the A321neo—a share of 47%.
In the current Airbus industrial system, only Hamburg and Mobile, Alabama are capable of assembling A321neos. By contrast, Toulouse is essentially focused on the A320neo, as Airbus has only received orders for 73 A319neos (compared to 1,486 for the original A319).
Airbus opened a fourth final assembly line in Hamburg in 2018, also mainly to cater for the much higher demand for A321neos. The fourth Hamburg line is substantially different from the three previous lines in that its production is far more automated. Fuselage sections are moved around on driverless tools for a more flexible production flow. While the new Toulouse assembly facility will be highly automated too, the exact design has yet to be decided and suppliers have also not yet been selected, according to Airbus. The OEM said it will use best practices.
Hamburg went through some significant teething issues that contributed to substantial A321neo delivery delays in 2018 and 2019, but those are now resolved. The issues were partly linked to the layout of the assembly hall which had previously been used for A380 work and had not been specifically designed to house narrowbody production. Lessons from the Hamburg experience could prove valuable for Toulouse as there, too, the new line will be accommodated in a facility previously used for the A380.
The decision to modernize the final assembly process comes as Airbus is preparing for a return to higher production rates. The manufacturer cut back from above 60 aircraft per month to 40 in the early phase of the coronavirus pandemic. It is preparing to move back up to 43 in the third quarter and to 45 in the last three months of 2021. CEO Guillaume Faury said recently that, while risks remain, he sees a much steeper ramp-up in 2022. Industry sources say Airbus has already told suppliers to expect a rate of 53 narrowbodies per month by the end of 2022. Airbus does not confirm that number and says no formal decision has been taken on that path. The company is pointing at diverging recovery trends—with the situation improving substantially in some countries and deteriorating in others. In India, IndiGo, one of the biggest current takers for A320neos, has announced plans for a capital increase to bolster finances in what it expects will be a tough way ahead. IndiGo has outstanding firm orders for 211 A320neos and 358 A321neos.
While modernizing final assembly processes in the ramp-up is the focus for the A320neo family, driving down supplier costs is key to the financial turn-around of the A220. To accelerate that process, Airbus has named Benoit Schultz as the new CEO of Airbus Canada effective Sept. 1. He replaces Philippe Balducchi, who is leaving the company.
Schultz is currently Airbus Group’s SVP of Procurement and as such is responsible for handling the supply chain. When Airbus took over the former C Series program from Bombardier and renamed it the A220, Faury said production costs had to come down by 20% and measures to reach that target must be identified within the first three years of Airbus controlling the program.
Industry sources say progress in renegotiating supplier contracts has been slower than foreseen, making breaking even and turning a profit harder to achieve. Airbus has already been signaling changes in its relationship with suppliers more broadly by announcing the reintegration of Stelia Aerospace and Premium Aerotec and making clear that “there will be a lot of make” (Faury), referring to make-or-buy decisions.
Key suppliers of the A220 include Raytheon Technologies (avionics, engines) and Spirit AeroSystems, which produces the aircraft’s wings in Belfast. Fuselage sections are built by Shenyang Aircraft Corporation in China. Airbus has 649 firm orders for the A220-100 and A220-300. So far 165 aircraft have been delivered. Airbus increased the A220 monthly production rate from four to five aircraft at the end of the first quarter.
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