Airbus to minimise exposure to COVID-19 disruptions by outsourcing production of A320neo components

Following the news that Airbus is scrapping plans to produce A320neo nacelles and engines in house;

Nicolas Jouan, Aerospace and Defense Analyst at GlobalData, a leading data and analytics company, offers his view on Airbus' situation:

"The news that Airbus was giving up on its plans to take over the production of A320neo nacelles and engines from Raytheon Technologies was understandably criticised by French unions whose workforce has already been affected by furloughs and reduction of working hours. More furlough schemes have been announced as recently as last week by Airbus, with the decision to extend current staff reduction programs to 5,300 workers in Spain and the UK, all of them working on commercial platforms such as the A320neo. The plan to take over nacelles' production from Raytheon Technologies will be abandoned and replaced by a contract extension with the American company, reinforcing offshore outsourcing.

"This move is linked to severe COVID-19 disruptions currently affecting commercial aerospace. To face falling demand for new jetliners, Airbus already reduced production rates of its main commercial platforms by 40% overall for two year, including the A320neo whose sales have stalled at 47 net orders in 2020 so far according to Airbus' figures.

"Much uncertainty still surround the potential recovery of commercial aviation, but it is now clear that Airbus' pre-crisis output at around 60 A320neo per month is far too high to be sustainable in the medium term. Taking over the production of nacelles and engines would therefore expose Airbus to a far more rigid supply chain as actual demand will remain uncertain for the next few years, offsetting any potential saving on maintenance costs."