Airbus plans to cut costs “significantly” on the A220 programme which the European manufacturer took control of last year even as it tries to increase production of the regional jet.
“We need to reduce the unit cost by more than double digits [percentage],” said Philippe Balducchi, chief executive of the A220 partnership, at its base in Mirabel, Canada.
The majority of the cost reduction is expected to come from the supply chain. The company, Mr Balducchi added, was in talks with its suppliers to enhance efficiencies and reduce costs on the lossmaking programme.
Airbus agreed in 2017 to take a 50.1 per cent controlling stake in what was then Bombardier’s C Series, the newest in the industry and highly regarded for its fuel efficiency, but which had struggled to secure orders.
It followed a threat by the US Department of Commerce to slap 300 per cent tariffs on the regional airline. Boeing, Airbus’s rival, had complained that the C Series, assembled in Canada with wings made in Northern Ireland, had been funded with illegal UK and Canadian subsidies and dumped below cost into the US. Boeing had launched its challenge after the jet won a multibillion-dollar order from US carrier Delta Air Lines for an initial 75 jets.
The US International Trade Commission in January 2018, however, rejected the tariff proposals, and said it had found no evidence of damage to Boeing.
Since Airbus took full control of the re-named A220 in July last year the aim, said Mr Balducchi, had been to “bring the efficiency of the Airbus machine behind the programme”.
The A220 partnership, which also includes Bombardier and Investissement Québec, delivered 33 A220 jets in 2018, of which 20 were handed over to airline customers in the second half. Seventeen aircraft were delivered in 2017. Since the programme’s launch in 2016, 57 jets have been delivered to five different operators.
Airbus said it planned to ramp-up the production rate of the aircraft but declined to give a precise target. The company is applying some of the lessons it has learnt from the rate increase of its successful A350 jet.
Florent Massou, Head of the A220 programme, said the final assembly line at Mirabel was capable of producing ten aircraft a month. A second line in Mobile, Alabama, will be capable of producing four aircraft a month. He promised that “the ramp up is not over”.
Analysts at Agency Partners predicted at the time of the Airbus deal in October 2017 that the A220 programme would reach breakeven or make a small profit in 2021.
Airbus said it also plans to invest around US$30m over the next twelve months at the facility in Canada, which will include a new delivery centre.
The European group separately announced it had won an initial contract from the US government to develop a small constellation “satellite bus” for a programme to build a network of prototype satellites in low-earth orbit. The “satellite bus” will drive each satellite by among other things, generating power, controlling altitude and providing propulsion.
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