Summary
Airbus' plans for a narrowbody assembly-line in Tianjin, China, are running more than a year behind schedule and costing EADS far more than anticipated.
Analysis
The Airbus division of EADS makes great play about production rates, particularly on the successful, German-dominated narrowbody production line in Hamburg. Unfortunately for EADS and Airbus, this 'play' is not always too credible: "Airbus will increase its monthly production rate to 40 for its single-aisle A320 Family by the end of 2009. Currently, Airbus produces 32 A320 Family aircraft per month" (May 2007 Airbus press release).
Well no, not exactly. In fact, nowhere near it. And this exaggeration is important since production rates are the prime indicator of bookable revenue since roughly 90% of a manufacturer's income on the sale of an aircraft is payable only on delivery.
But Airbus believes a great deal in 'headline news'. It is regularly pilloried in the press for all the delays to its French-run widebody programs (A380, A350 and A400M) so it's logical in a perverse sort of way that it takes some revenge on the media with what is nothing more than 'spin'. But this sort of spin has implications.
Anyway, here's a quick look at the picture when it's not spinning:
- in January 2008 Airbus delivered 31 A320-family aircraft
- in the 25 months to January 2008, the A320-family production rate was 29.5/month
- in the two years to December 2007, the A320-family production rate was 29.4/month
- in 2007, Airbus built and delivered 367 A320-family aircraft (30.6/month)
- in 2006, Airbus built and delivered 339 A320-family aircraft (28.25/month)
- full-production in China is four aircraft per month, now expected in 2011, not end-2009 as Airbus forecast less than nine months ago
Contrast this with then-Airbus ceo Louis Gallois' May 2007 statement on the increases in the narrowbody production rate:
- by March 2008, [A320-family] output is set to reach 34
- ...then 36 [per month] in December 2008
- ...to 38 by mid 2009 and reaching 40 by the end of 2009.
(Note: output does not equal delivery, as the November 2007 Etihad Airways A340-600 written-off at Toulouse in an engine test that went badly wrong clearly indicates).
Like the much-vaunted yet still totally elusive Power8 cost-cutting program, there is a huge gulf between what Airbus says and what it actually does. Building 30+ aircarft per month is no mean achievement, in fact it's pretty impressive, but there is no justification for artificially inflating the numbers for short-term gain or in attempted deflection from current problems.
These delays (or 'revisions to the original schedule') have taken the Airbus China final-assembly plans further into the red since, as mentioned above, the money doesn't start to flow until the aircraft start to go. And of course, there is no guarantee that the Chinese A320 production ramp-up will not encounter the same learning-curve problems which have put paid to the vast majority of Western-originating aerospace projects in China over the past 25 years.
But as they say, Airbus is a company with great promise: "always promising this, always promising that...". And EADS continues to pay the penalty for all this 'promise'.
