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February 26, 2024

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Airbus has five assembly facilities for narrow-body aircraft – Toulouse, France; Hamburg, Germany; Tianjin, China; Mobile, Alabama; USA; and Mirabel, Quebec, Canada. With massive aircraft orders coming in from India, the country currently transitioning from rail to air, would an assembly line in India make sense? Airbus currently has a strong footprint in India that it could expand.

For several reasons, India’s Minister of Commerce, Piyush Goyal, believes it would. First, it would provide additional capacity during the current boom, as Airbus is now selling into 2031 for its most popular models. Second, with more than 1,100 aircraft ordered by Air India, Indigo, and Akasa in the last 11 months, there is certainly high demand in the subcontinent. Third, India will remain a large customer, with airlines likely ordering thousands of new aircraft over the next 20 years. Finally, India has traditionally sought offset arrangements and, with their volume, is looking for additional local content.  A final assembly line would be well received and welcomed from the Indian standpoint.

But does it make sense for Airbus? The downside is having another identical remote facility for the A320 family, which will likely be replaced with a new aircraft in the 2030-2040 time frame. Airbus does understand how to have identical lines and processes in multiple countries. An additional A320 line in Asia would support the strong demand from Indigo, which is currently holding the largest backlog for Airbus aircraft, with more than 900 on order. A facility building 4-8 aircraft per month would yield 48-96 aircraft per year, which could fill much of the local demand.

As mentioned earlier this week, United is seeking additional A321 aircraft if Airbus could find a way to insert aircraft into their near-term delivery skyline. With the MAX10 likely delayed until 2026, the ability to shift some orders in the very short term is not as critical to equal Boeing’s time frame. While Airbus would be unlikely to have a new plant up and running in only two years, a four-year program is not insurmountable, particularly if Airbus leverages its experience in building its most recent final assembly lines in Mobile.

The Bottom Line

Airbus can leapfrog Boeing, both in key markets and with key customers. It is clear that Airbus has a strong customer base in India and could likely grow that base even more if it had a domestic facility. That would free capacity in other countries to fill incremental demand, such as that potentially from United.

 


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