Airbus criticizes skeptical supplier Raytheon over jet output

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PARIS, Sept 23 (Reuters) – Europe’s Airbus ( AIR.PA ) clashed with U.S. giant Raytheon Technologies ( RTX.N ) on Friday over plans for a record jump in jetliner production after the industry’s biggest contractor questioned if an affected supply chain could Continue.

The world’s biggest plane maker said it was sticking to a two-pronged plan to boost production by 50% from current levels by 2025 – a target that would help Airbus become the first civilian planemaker to deliver 1,000 planes in a single year.

Chief Executive Guillaume Faury said demand was likely to exceed supply for the most-produced medium-haul models, with Airbus holding a lead over U.S. rival Boeing ( BA.N ).

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But speaking at the company’s first full-scale investor event in four years, he acknowledged concerns from inflation to interest rates and said the broad body’s recovery was less certain.

“We’re in a period where things are accelerating; we have more crises to deal with,” Faury said.

He spoke of a possible share buyback as Airbus rebuilds cash depleted by what he called the “existential crisis” of COVID-19, but warned “we’re not there yet”.

Airbus shares drifted in and out of positive territory and by mid-afternoon were up 0.4%.

A setback outside China has seen demand for the medium-haul A320neo and Boeing 737 MAX recover faster than expected. But Airbus’ plans to build 75 A320neo family planes a month by 2025, up from about 50 now, have met with some skepticism.

The head of Raytheon Technologies, which owns engine maker Pratt & Whitney, told a conference last week that Faury “may say rate 75, but we think rate 65 is doable” in 2025.

Faury called the comments “really unhelpful” and said the engine manufacturers were concerned about the timing, not the number. “They believe 75. I can be cited because I checked,” he told investors.

Raytheon had no immediate comment.

Reuters reported this week that Airbus had eased pressure on suppliers to commit to the 2025 deadline, leaving room for it to slide to 2026, but sticking to the targets for now. The company has not said when in 2025 it can hit the 75 target. Read more

The key, suppliers say, is when targets can be consistently hit.

“We’ll see when we plan to hit rate 75, in (20)25 hopefully. I’m committed to (20)25. That’s probably something we’ll communicate more precisely at our full-year results,” Faury said Friday.

A220 UPGRADE

Airbus, meanwhile, gave the strongest hint yet that it plans to launch a larger version of its 110-to-130-seat A220 airliner, but gave no clues about the timing of the decision.

A stretched version of the lightweight aircraft makes a lot of sense, “but we don’t want to be right too soon,” Faury said.

The A220 was developed with an eye on the bulk of the jet market, but Canada’s Bombardier struggled to keep up with the investments needed to supplant Airbus and Boeing and sold its aerospace jewel to Airbus in 2018.

Airbus has faced higher-than-expected costs on the loss-making program but believes it can break even by mid-decade.

An A220-500 would begin the process of replacing the 150-seat-plus A320neo, Europe’s airliner and a key battleground in the transatlantic war for sale with Boeing.

Airbus has seized a commanding lead in the bulk of the single-aisle market, most recently through the larger A321neo, which chief financial officer Dominik Asam said would command an increasing share of sales.

Although Airbus was born as a maker of long-haul, wide-body aircraft with the A300 taking flight 50 years ago next month, its biggest commercial success by far has been in the single-aisle jets popularized by low-cost carriers.

Improvements in the largest single-aisle jets have eaten into the lower end of a market that for decades has been reserved for wide-body jets such as Boeing’s 747, 777 and 787 or the Airbus A350.

Faury said Airbus aimed to step up competition with Boeing in the wide-body market, starting with the new A350 freighter. Experts say Boeing dominates air freight and has so far outsold the A350 with its future 777X Freighter.

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Reporting by Tim Hepher; Editing by Edmund Blair and Mark Potter

Our standards: Thomson Reuters Trust Principles.

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