U.S. News

UPDATE 1-Airbus hikes A380 sales target


PARIS, May 10 (Reuters) - European planemaker Airbus doubled its target for 2010 sales of its A380 superjumbo to more than 20 on Monday, saying a rebound in passenger traffic pointed to resilience in the world economy. The world's largest passenger jet manufacturer also signalled confidence in a relatively shallow downturn in the aircraft business cycle by saying production could rise again following an increase already planned for later this year. The comments came in a briefing by Airbus sales director John Leahy, monitored by webcast. Leahy, who earlier this year forecast sales of up to 10 A380s worth $340 million each in 2010, said sales of the world's largest airliner could exceed 20 this year. Airbus, which competes with Boeing, has predicted a total of 250-300 plane orders in 2010 and deliveries from previous sales in line with last year's record total of 498. It has found buyers for a total of 202 A380s but critics say the 525-seat plane, which entered service in 2007, has sold relatively poorly compared to upcoming mid-sized models because it is restricted to flying between large intercontinental hubs. Leahy said airline traffic was recovering from recession and that sharp growth in freight volumes carried by air indicated a strong recovery in the global economy. Over the long term, the growth of "megacities" would support A380 sales. "You can't have economic recovery without air traffic and you can't have air traffic without aircraft," Leahy said. Several airlines earlier reported drops of up to a quarter in traffic in April due to the volcanic ash crisis but Air France-KLM said the underlying picture was positive. Leahy said aircraft production was likely to be less volatile than the 30 percent drops from peak to trough seen in previous downturns, since Airbus and Boeing had shown restraint. Airbus cut production of the A320-family short to medium-haul planes to 34 a month from 36 in October but has since announced plans to reverse the cut later this year. Leahy said the move after that was "more likely to be up rather than down". He said Airbus had not yet decided whether to push ahead with a possible project to upgrade the engine on the A320 family, whose single-aisle plane category is seen as the lifeblood for both Airbus and Boeing, with its rival 737. The "re-engining" project is designed to deliver interim fuel savings before a new generation of aircraft becomes available next decade and would cost $1 billion, Leahy said. Boeing has hinted it might pass on the re-engining and try to leapfrog Airbus by moving straight to an all-new plane earlier than anticipated, but Leahy predicted that Boeing would follow suit if Airbus decided to put new engines on the A320. He said a decision may not be ready for a few months and there was a case to be made both for and against re-engining. The re-engining project is significantly cheaper than the cost of a new plane, which would need an investment of $10-12 billion, but engine makers say the technology available for an all-new generation will not be available before next decade. (Reporting by Tim Hepher; Editing by Dan Lalor) Keywords: AIRBUS/ (+331 4949 5452 paris.equities@reuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.