Airbus Group NV Chief Executive Officer Fabrice Bregier is laying plans to overtake Boeing Co. in the U.S., the largest aerospace market, starting with a new factory in Alabama.
It’s an aggressive move, considering that the French-based planemaker only controls about 20 percent of the U.S. market. That share will reach 40 percent once carriers like American Airlines take delivery of the company’s planes on order. Bregier’s team has 50 percent share in its sight in a market that has traditionally tilted toward Boeing.
Airbus will raise its profile, and lower costs, with a $600 million plant for single-aisle airplanes to be unveiled Monday in the city of Mobile. The facility is only the second such plant it has built outside of Europe.
"Our first U.S. facility has been years in the making," Bregier told reporters Sunday. "It is the most significant, game-changing incident in U.S. aerospace in years."
The first two aircraft already taking shape in the facility are A321 jetliners, the largest single-aisle models that Bregier is counting on to wrest market share from the Chicago-based planemaker. The planes seating upwards of 200 passengers are becoming a mainstay of transcontinental flying by American, Delta, JetBlue and other airlines.
Asked if he were plotting a new mid-sized aircraft to counter the 757 replacement on Boeing’s drawing boards, Bregier nodded to the A321. "The aircraft exists already," he said. "You don’t need to reinvent it."
Most of the jets built in Mobile will be delivered to North American customers, Airbus said. Deliveries are due to start early next year out of the 53-acre (215,000-square meter) facility, with the production tempo increasing to four aircraft a month by early 2018. Airbus also produces four A320s a month in Tianjin, China, which is poised to eclipse North America as the largest aviation market.
"It’s all about location," said Michel Merluzeau, vice president for aerospace strategy and business development with consultant Frost & Sullivan. "It’s about where you do business, and how that property is going to grow over time."
The first two single-aisle jets, bound for JetBlue and American, are taking shape at the new plant, whose 260-employee workforce will swell over time to 1,000. The plant and planes will be certified by European regulators rather than the U.S. Federal Aviation Administration.
"We’re producing on American ground a European product with American people,"said Timo Zaremba, who oversees product quality at the Mobile plant.
Jet production costs and factory capacity are vital as Boeing and Airbus plot to boost output of single-aisle jets that serve as workhorses for the global airline fleet to upwards of 60 aircraft a month. Airbus currently builds the A320 at the same 42-jet pace as Boeing makes its 737.
The planemakers are racing to reap profits from a near-record backlog of narrowbody jet orders: 5,181 for Airbus to 4,253 for Boeing, according to data compiled by Bloomberg Intelligence.
Boeing makes its 737 jets at a single factory in Renton, Washington, although the company is considering adding a plant in China where planes would be finished and delivered.
Airbus spreads the work across three factories spread around the globe. Adding a fourth plant in Alabama will give Airbus greater flexibility to ratchet output up, or down, while saving on land, energy and labor, said Kevin Michaels, vice president with the aerospace practice of consultant ICF International. Final assembly line labor costs represent about 10 percent of the total expense of building a jetliner, he said.
If Airbus decides to hoist A320 production past 60 jets a month, it will add a fourth production line in Hamburg and consider doubling output in Mobile, provided the initial ramp up over the next three years goes smoothly, Bregier said.
"For Airbus is it all about adaptive capacity," Merluzeau said. "How can we free more space in Toulouse and Hamburg without compromising quality and rate?".