Airbus boosts A320 production to 60 per month

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By TESTCustomwebLP TESTCustomwebLP October 30, 2015 19:38

Airbus boosts A320 production to 60 per month

As we predicted in May 2015, Airbus confirms it is to boost A320 production to 60 a month in mid-2019. The question is whether this is necessarily good news for the market? For the manufacturer the case is clear cut – get all lines working on the Neo as soon as possible. There is no debate there but there should be quite a few A320s coming off lease around 2020 as the eight year leases have generally been extended recently for an additional five years – and it is those aircraft that will be adversely affected. Conversely however, so many A320s will have reached the end of their lives in 2020 that we might find that a balance is reached and that there is no impending A320 bubble to be caused by overproduction as the pool of A320s will be somewhat slimmer than it is right now. The airlines and lessors taking those final A320ceos will be taking aircraft that will lose value far faster than any other A320s previously and that should have been reflected in the sale/purchase price of the same. The real question though is what aircraft values the airlines will keep on their books at? I foresee a fair few airlines living the good life with these deliveries for a few years before having to take very large write-downs, and at that point some of them that have launched IPOs recently will be fielding shareholders questions on what has caused such a large short-term hit. We need more airlines like Qantas in this world, where bold steps to correctly value aircraft have been taken to get the assets moving on the secondary market. The airlines still have all the control on values, they need to get real though.

These are interesting points to note and it will be well worth attending the manufacturer output debate next week at 16:45 on the 3rd November at Airline Economics Growth Frontiers Hong Kong to see what the five major manufacturers think about production levels and their impact.

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By TESTCustomwebLP TESTCustomwebLP October 30, 2015 19:38