Spirit Aerosystems CEO Jeff Turner remains "terribly worried" about the contradictory assessments of airframers and industry analysts on the need for a cut in single-aisle production heading into 2010.
Turner made those comments today during Spirit Aero's quarterly earnings call, remarking that Boeing and Airbus have "defied the accumulated wisdom of analysts," which have all projected a decline in single-aisle production.
Heading into 2010, Boeing and Airbus continue to hold A320 and 737 production production rates relatively steady amid widespread calls for reductions. Airbus announced earlier this year that A320 family aircraft production would drop from 36 to 34 aircraft a month, a goal that has since been met. Boeing continues to produce 31 737s per month.
Boeing will also cut its twin-aisle 777 production from 7 per month to 5 per month by June 2010, while Airbus will hold A330/A340 family production at 8.5 per month, postponing a planned increase.
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"Flat is the new up," says Turner, who sees steady production rates as good as growth in the uncertain economy.
Boeing and Airbus have both maintained that overselling their respective backlogs creates flexibility to backfill any deferrals or cancellations, ultimately negating any need for a cut in production.
Analysts and lessors contend that the high rates of production in poor economic times may risk driving down leasing rates and asset values if supply is too high and demand is too low.
"I was terribly worried three and six months ago, and I remain that way," says Turner.
"There's a lot of disagreement over whether rates will hold or not. I know there's concern that holding them this long creates more of an issue. So far Boeing and Airbus have stated that they are able to hold their [production rates]. I remain ambivalent, but I can see both sides," he adds.
Sprit's contract with Boeing is structured to require six months of notice of any production rate changes.
Spirit builds complete 737 fuselages that are shipped by railcar for final assembly to Boeing's Renton, Washington facility. Spirit says that it has delivered more than 3,100 Next Generation 737 fuselages to Boeing. Spirit is also responsible for fabrication of part of the A320 family leading and trailing edges of the wing.
Source: Air Transport Intelligence news
