Airbus Trims Production as Jet Demand Slows

(MoneyWatch)  With leading global airlines putting more planes on the ground, Airbus announced today that it will trim production of its top-selling single-aisle A320 jets this fall.

Airbus also has scrapped plans to increase production rates for its A330 widebody jets.

Airbus had ramped up A320 production to a record 36 planes a month last year -- a move most analysts said was aimed at improving cash flow. But with airline traffic falling, the Euro jet builders will cut that back to 34 a month in October.

"Many airlines are taking capacity out of the market," CEO Tom Enders said. "I do not exclude further production cuts if the need arises."

Airbus executives said they don't expect job cuts, at least not for now.

Last week, Boeing Commercial Airplanes chief Scott Carson said his company also is considering rate cuts of about 10 percent, and could announce a decision on that this spring. Boeing is trimming 5,500 workers from its Seattle-based commercial airplanes division, out of 10,000 jobs it plans to cut companywide.

The few airlines that are in the market for jets are likely getting very good bargains. Korean Air recently booked a deal for two of Airbus' A380 superjumbos, and Ethiopian Airlines is in the market for more long-range widebody planes, to go with the 10 Boeing it already has on order.

And Ryanair CEO Michael O'Leary repeated this week that he's planning to seek bids from both Boeing and Airbus on a major single-aisle jet order (although he's now seeking 200 planes, instead of the 400 number the Irish airline dropped earlier this month).

O'Leary said he's willing to wait till the jet builders' order books "collapse," and added that he expects to negotiate 50-percent discounts on the planes he gets. (Analysts tell me Boeing and Airbus routinely dangle discounts of between 25 and 35 percent on single-aisle jet orders.)

Ryanair's long been a Boeing-only airline and Airbus executives don't seem interested in doing much to change that. "We are not in discussions with Ryanair about aircraft," Airbus sales guru John Leahy said recently. "That is on the record. We don't have plans to enter a sales campaign with Ryanair, which would be very expensive and very time consuming."