Airbus hikes jet output as earnings beat forecasts

Boeing and Airbus battle for China

Airbus Group announced a 20-percent hike in production of its most popular jet and dismissed growing nerves about the health of the jet market as it reported better-than-expected quarterly results, driven by its main planemaking division.

Europe's largest aerospace group said it would raise production of the A320 jet family to a record of 60 airplanes a month in 2019, compared with its previous target of 50 a month in 2018. It currently produces around 42 a month.

Investors and suppliers are increasingly concerned about a glut of aircraft production as Airbus and U.S. rival Boeing wage a vigorous battle for market share, but Airbus said it was confident a strong run in jet demand would continue.

"The healthy commercial aircraft market, robustness of our backlog and supply chain capability allows us to raise the single-aisle production rate to 60 a month in mid-2019," Chief Executive Tom Enders said.

Reuters had reported on Thursday that the company was set to announce an increase in output of its most popular jet, a key source of cash for funding new developments

The move is expected to put pressure on Boeing to follow suit.

Airbus 320neo (new engine option)

Airbus Group, whose shares have risen 47 percent this year, also said it would immediately start a previously approved 1-billion-euro ($1.1 billion) share buyback, to be completed by mid-2016.

"Both the (production) rate hike and buyback have been topics of recent debate with investors who saw some mild risk to both," Barclays analysts said in a note.

Airbus said the industrial production ramp-up of its new A350 mid-sized wide-body jet was progressing, but remained "challenging", and reaffirmed plans to break even on the A380 superjumbo this year.

It also reiterated plans to certify and deliver its smaller A320neo, an upgrade of the best-selling narrowbody model, in the fourth quarter despite "several interruptions" to flight tests due to problems with its new Pratt & Whitney engine.

Airbus Group posted a 12-percent increase in third-quarter operating profit before one-off items to 921 million euros. Quarterly revenue grew 6 percent to 14.072 billion euros, and the company confirmed its annual targets.

Analysts were on average expecting quarterly operating income before one-offs of 768 million euros on revenue of 13.867 billion, according to a Reuters survey.