By Benjamin Katz 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (July 31, 2020).

Airbus SE, reeling from the fallout from the coronavirus pandemic, said it doesn't expect to start increasing aircraft production again until around 2022 as the crisis hitting the aviation sector deepens.

The European plane maker, which cut its production rates by a third in April, said Thursday it would again reduce the output of its A350 wide-body from six aircraft a month to five. It also reported a net loss of EUR1.9 billion ($2.24 billion) in the first half, down from a profit of EUR1.2 billion a year earlier.

Chief Executive Guillaume Faury said he expects production rates for the company's popular single aisle, the A320neo, the rival to Boeing Co.'s 737 MAX, to recover first, helped by an expected recovery in short-haul and domestic travel.

Work on bigger aircraft used on longer international routes is set to remain depressed for longer, he said.

The outlook for the industry has deteriorated in the last three months, he said, with the industry on a "long and slow recovery" path. The company said it was trying to hold on to cash in the second half of the year after burning through EUR4.4 billion in each of the first two quarters. Including its record-breaking settlement of bribery and corruption allegations in January, the company posted a negative free cash flow of EUR12.4 billion in the half.

Cash has been hit by a flurry of order deferrals by its customers, leaving Airbus with about 145 aircraft parked and awaiting delivery. Airbus has handed over 196 jets as of the end of June, about half of the number delivered at the same point last year.

Airbus' earnings and production outlook comes a day after Boeing laid out plans to navigate through the pandemic with additional cuts to production, including delaying its production plans for the MAX and further reducing the output of its 787 and 777 wide-bodies.

Mr. Faury said Airbus was keeping a close eye on its 3,200 suppliers, establishing "watchtowers" to monitor the weakest. So far, the supply chain is coping, but he warned that a "big second wave" of infections in winter would make the situation more critical.

Write to Benjamin Katz at ben.katz@wsj.com

 

(END) Dow Jones Newswires

July 31, 2020 02:47 ET (06:47 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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