 "Scaling up plane production is main challenge, India can help: Airbus CEO")
The "main" challenge Airbus faces today is scaling up aircraft production, and India can help "debottleneck" this process by becoming a more integral part of the supply chain, its Chief Executive Officer (CEO) Guillaume Faury said on Monday.
Faury was addressing a press conference after an event organised by French Aerospace Industries Association (GIFAS), an industry body comprising 482 French companies.
Owing to shortage of engine and other components, Airbus had in June reduced its 2024 delivery target from about 800 to 770 airplanes. Moreover, the company had in June delayed its goal of producing 75 narrow-body aircraft per month from 2026 to 2027.
Asked about his plans to set up a final assembly line (FAL) for commercial planes in India, he said that the FAL is just the tip of the iceberg and it is not a "limiting factor". He mentioned that the "limiting factor" is the supply of large equipment, which has been affected due to fragile supply chains at the lower end of the pyramid.
Faury stated that there are "plenty" of opportunities for companies around the world when it comes to becoming part of the supply chain related to aircraft manufacturing.
"In my view, India, in particular, can contribute to debottlenecking the supply chain in today's environment, which again is not limited by the (existence or non-existence of) FAL. Actually, today, at Airbus, we are oversized in terms of the FAL system. And, we can't be taking more orders knowing that we are fully booked," said Faury, who is the chairman of GIFAS.
Airbus has increased its sourcing of hardware and software from India to 1 billion euros in 2023 from 500 million euros in 2019.
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The CEO mentioned that Airbus has 8,600 planes in the backlog today, whereas it has a production target of 770 aircraft this year. "So, you see, even with the ramp up, we have a backlog that is around ten years of activity. So, we will be taking orders when we have slots available. But the main challenge is not to feed the backlog in the 2030s. The main challenge is to be successful in the ramp-up now, and to find other ways to bring new suppliers, new partners, new equipment suppliers to the table that will help us accelerate the production. That's the main challenge," he explained.
In June 2023, IndiGo placed the largest aircraft order in history, securing 500 A320neo family planes from Airbus, with deliveries scheduled between 2030 and 2035. The airline is also set to receive around 460 aircraft by 2030 from a previous Airbus deal, bringing the total number of aircraft delivered to IndiGo to 990 over a little more than a decade.
Faury stated he is observing "fierce" competition in the Indian aviation market right now. "The Indian market is booming, fuelled by the growth of the population and the growth in wealth. New airports create new connections. It is indeed a very competitive market. Indian airlines compete fiercely in the market. Certain challenges come with fast growth but there can be no doubt that it is poised for success. On challenges... (let me say) growing at this pace is not so easy," he noted.
He stated that Airbus is setting up a FAL in India for the C295 military planes. "It is not just the FAL, it's the complete manufacturing of all the parts of the aircraft. And that keeps us very busy. In spite of this, we have also announced — in the field of civil aviation — our decision to build in India a FAL for the H125, which is the most successful civil helicopter existing today on the planet. This line will be here in India with our partner Tata Group," he noted.
"Other companies are also placing final assembly lines for engines or for other planes. So, that's really on the agenda. And there are other ideas in the field of regional aircraft where the French ecosystem, the French companies will be very happy to engage and see how they do this. We like this model, but we do it (establishing FAL) where it makes sense when it makes sense," he explained.