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Plane maker wants to avoid supply constraints it has suffered on smaller narrow-body model
LONDON—Airbus SE buoyed by its latest deal to sell wide-bodies to Air India Ltd., is planning to boost production rates of its two biggest models as it tries to capitalize on resurgent demand for long-haul travel, according to people familiar with the matter.
The European plane maker is planning to increase its so-called build rate for both of its currently produced wide-body aircraft, the A350 and the A330neo, according to these people. An announcement could come as early as this week, the people said, cautioning that a decision has yet to be finalized.
Airbus EADSY -0.44%decrease; red down pointing triangle slashed production of its wide-body planes at the onset of the pandemic, when travel restrictions and border closures brought international traffic to a near standstill and airlines were clamoring to cancel and defer aircraft orders.
With the relaxation of most Covid-19 travel protocols, airlines are now facing a dearth of available wide-body jets, leaving carriers trying to bring back into service previously mothballed models. Those include the Airbus A380, the world’s biggest passenger plane. Carriers are also trying to snatch up rentals from aircraft-leasing firms.
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European plane maker had canceled orders for dozens of aircraft after legal fight
LONDON—Airbus SE agreed to revive orders for close to 75 aircraft from Qatar Airways after reaching a settlement with the Middle East airline over a long-running dispute about chipping paint on its A350 wide-body models.
A spokesman for Airbus said it would now go ahead with delivering 50 A321 narrow-bodies and 23 remaining A350 twin-aisles previously ordered by Qatar.
The orders had been scrapped as part of an escalating, multibillion-dollar legal battle over the paint issue, which the airline had claimed could pose a safety concern. Airbus repeatedly denied the claims.
Airbus and Qatar Airways earlier Wednesday said in a joint statement that they had reached an “amicable and mutually agreeable settlement” in relation to the legal dispute. The companies didn’t disclose the details of the settlement other than to say the agreement didn’t amount to an admission of liability from either party. A program to repair the degradation on Qatar’s current fleet is under way, the companies added.
Qatar Airways had previously grounded 29 of its A350 jets and refused new deliveries over the issue, reducing its capacity amid a surge in travel to Doha for the 2022 FIFA World Cup. The airline has said the peeling paint was exposing the meshed copper foil that is designed to protect the aircraft from lightning strikes.
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RTX plans to buy back an additional $10 billion in stock to take advantage of the sharp slide in its share price since disclosing quality problems with its latest jetliner engine during the summer.
The world’s biggest aerospace and defense company by sales reported a loss for the third quarter as it booked a charge to cover compensation and repair of geared turbofan engines that will require the grounding of hundreds of Airbus jets next year.
RTX’s market value has fallen by more than $30 billion since the problems were disclosed in July, and Chief Financial Officer Neil Mitchill said it is taking advantage of the low price to repurchase shares.
Mitchill said the cost and repair timelines for engines remained unchanged from its guidance in September.
Shares of RTX, previously known as Raytheon Technologies, jumped more than 6%.
Here’s more detail on how RTX did in the third quarter:
RTX reported a loss of $984 million for the third quarter. Excluding the engine charge, per-share earnings of $1.25 beat the consensus among analysts polled by FactSet by 3 cents.
Adjusted sales rose 12% to $18.95 billion in the quarter, topping analysts’ estimates, with backlog rising to a record $190 billion after a third consecutive quarter of double-digit growth.
RTX also agreed to sell its cybersecurity and intelligence business for $1.3 billion to an undisclosed customer.
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Anyone who has walked into a used-car dealership knows about the risks of being sold a lemon. When it comes to aircraft, however, it is the newer models that seem more likely to leave owners stranded.
The price tag for a 10-year-old Airbus A320-200—the backbone of the world’s short-haul fleet—has risen 10% since August, according to appraisal data from aviation-analytics firm Ishka. The popularity of trusty clunkers is rising because of issues affecting the newer version of the plane, the A320neo, introduced in 2016.
And it isn't an isolated case: The rival engine to the GTF is also suffering from durability issues. Ever since Boeing botched the development of the 787 Dreamliner in the 2000s, aerospace firms have been battling to rectify defects. As engineering more fuel-efficient jets keeps getting harder, future models may become even less reliable upon introduction.
The implication is that midlife jets may have a permanently higher “residual values,” which is good for lessors like AerCap and Air Lease Corporation, as well as aircraft asset-backed securities.
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