Boeing, General Electric Leap as Airbus boosts plane production targets
Airbus, the world’s biggest planemaker, will aim for a 10% increase in production this year of its workhorse A320neo aircraft, which uses engines made by General Electric and Safran.
Boeing and General Electric shares jumped higher Thursday after the world’s biggest planemaker boosted its near-term production targets amid the ongoing post-pandemic recovery in global airline passenger traffic.
Airbus, which overtook Boeing’s lock on the global planemaking business last year, said it will produce 45 of its single-aisle A320neo aircraft by the end of the year, a 10% increase from current levels, with output rising to 64 each month by the middle of 2023.
The A320neo used a LEAP-1A engine made by CFM International, a joint venture between GE Aviation and France-based Safran SA SAFRY.
Reuters reported earlier this month that Boeing could take its Max production output to 42 jets per month by the fall of next year, well ahead of the planemaker’s current target of a “gradual” increase to 31 planes per month by the spring of next year.
GE shares were marked 4% higher in early trading Thursday to change hands at $13.94 each, a move that would extend the stock’s year-to-date gain to around 27%. Boeing shares were marked 3.3% higher at $249.40 each.
Boeing had cautioned earlier this year that it doesn’t expect global airline passenger traffic to return to 2019 levels for at least another two years, adding that airline customers continue to adjust their operations and fleet planning based on those projections.
That view was echoed by the head of the International Air Transport Association lobby group, Willie Walsh, who told reporters in Dublin earlier this week that staff cuts and a dearth in new aircraft supply means the “ability for the industry to recover to the 2019 levels of capacity quickly is now impossible”, adding the return may in fact take several years.
Last week, however, the Transport Security Administration said it screed more than 1.85 million travelers at domestic airports, the highest total since the pandemic began in March of last year, with analysts looking for a 2 million tally over the Memorial Day weekend.
Citigroup analyst Andrew Kaplowitz is also bullish, pegging a $17 price target on GE, alongside a reinstated ‘buy’ rating, citing a “gradual but likely” recovery in its struggling aviation business
“As we look to the future of flight, no business is better positioned than our aviation business,” CEO Larry Culp told investors on April 27 after the group posted a stronger-than-expected bottom line of 3 cents per share on revenues of $17.1 billion . “In the near term, our focus is getting people back into the air safely.”
“And as the market recovers from COVID, we’re well placed with the largest and youngest engine platform, with more than 37,000 commercial engines and more than 60% of our fleet that has not yet had a second shop visit, underscoring the value of our platform will generate for decades to come,” he added.
By Martin Baccardax www.thestreet.com