(Bloomberg) -- Airbus SE pledged to churn out more aircraft than ever and consolidated its ownership of the A220 jetliner, pressing home its advantage over Boeing Co. and its grounded 737 Max in the growing narrow-body market.
The European planemaker said Thursday that it expects to hand over about 880 jets in 2020, building on record output last year. Deliveries of the A320-family workhorse, a direct competitor to the Max, will rise to as many as 67 a month by 2023, while the smaller A220 will also see volumes accelerate.
Together, the moves are meant to draw a line under a tumultuous 2019 after production shortcomings prevented Airbus from fully exploiting the Max crisis at its U.S. rival. The Toulouse, France-based planemaker also ran into trouble with its military transport plane, the A400M, canceled the ambitious A380 super-jumbo and settled a longstanding bribery probe for 3.6 billion euros ($3.9 billion), driving annual results to a loss.
“We’ve put a lot behind us in 2019 and are now looking at 2020 to set the foundations of sustainable growth,” Chief Executive Officer Guillaume Faury told reporters. “We want to continue to gain contracts, to maintain the visibility we have today.”
Airbus is paying $591 million to the A220’s developer, Bombardier Inc., to boost its stake in the program to 75%, expanding its bet on a plane that seats 100 to 150 people and complements the larger A320.
The promise of the new plane was underscored on Thursday when Airbus announced an outline agreement to sell 50 to Nigeria’s Green Africa Airways. It’s a coup for the A220, after the startup originally ordered the Boeing Max, which has been idled since last March.
“We have opportunities with the A220,” Faury said. “We see it can be a solution for some of the needs of the market.”
For Montreal-based Bombardier, exiting the A220 program closes the book on more than $6 billion of investment that was meant to challenge the two top planemakers, but instead left it saddled with debt that has forced the company into a breakup.
Originally named the C Series, the A220 won praise for fuel-efficient engines, composite wings and an airy cabin featuring large windows. But the plane ran more than two years late and about $2 billion over budget, and had trouble attracting buyers in an industry dominated by Airbus and Boeing.
After U.S. President Donald Trump’s administration imposed tariffs of about 300% on the jet, Bombardier agreed to sell about half the program to Airbus. Still, the Canadian company was left with hundreds of millions of dollars of funding obligations. Those are now gone, and with Thursday’s deal the government of Quebec lifted its share in the A220 program to 25%.
After also selling its turboprop-plane business, its regional jet arm and a wing plant in Belfast, Bombardier is in advanced talks to sell its rail business to French rival Alstom SA, people familiar with the matter said Thursday. The embattled manufacturer is mulling the disposal of its corporate-jet operation to Textron Inc., maker of Cessna planes, the Wall Street Journal has said.
Shares of Airbus fell 1.6% as of 12:34 p.m. in Paris, after announcing full-year results that were blighted by one-time charges.
Airbus slumped to a net loss after a 3.6 billion-euro penalty for a bribery settlement and a 1.2 billion-euro hit against lower export prospects for the A400M airlifter.The corruption settlement will hurt cash flow this year, as will the A400M, says Jefferies analyst Sandy Morris.Company needs to maximize “financial firepower” until full repercussions of Max crisis are known: Morris.
Analysts said they were underwhelmed by Airbus’s production goals, citing estimates in the range of 900. The company is seeing some softness in the wide-body market where it sells the twin-aisle A330 and A350 models, Faury said in a Bloomberg Television interview.
Airbus has managed to broaden out its A320 family to address different customer demands, from the stout A319 to the A321 XLR that can perform some long-range missions. Still, its struggle to build custom cabin configurations has held back its ability to run away from the Max.
The Boeing plane was grounded worldwide after two crashes within a five-month span that killed 346 people. Boeing has said it expects the Max to return to the skies mid-year at the earliest.
Coming out with an all-new narrow-body probably won’t happen for another decade at a minimum, because technological advances don’t justify the expense at this point, Faury said.
But he reiterated Airbus’s intention to build a so-called stretch version of the A220, which would give the European company another weapon against the Max.
Asked if Airbus would consider stretching the model into a higher-capacity version, Faury said “not in the short term,” though it’s something the company is considering for the future.
(Updates to recast with Boeing rivalry, adds comment from Airbus CEO)
--With assistance from Christopher Jasper, David Scanlan, Guy Johnson and Benedikt Kammel.
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