Airbus is to consider scrapping a business that sells parts for its A380 superjumbo, planning to reinvest about $6 billion in developing a new version of the superjumbo plane, the head of the new business told Reuters.
The Airbus Helicopters unit may sell less specialised parts that help make the planes instead of offering them at a lower price, Chief Executive Nick Reilly said in an interview.
“We want to make sure that we have strong technical expertise. As an innovation business we’re good at making products that fly,” Reilly said.
“There is a huge market for smaller (parts), that is not sold in the whole of Airbus’ aerospace group.”
Airbus has already announced that it aims to increase production of its smaller A320 aircraft in half, with its smallest jet, the A319, and the A320neo, a re-engined version of the A320 model, due to enter service next year.
Reilly said he was also looking to increase the volume of content on the A320neo for European customers to be able to compete more easily for orders from the Middle East and Russia.
Investors welcomed the plan. Boeing Co shares are about 10 percent below the company’s target of rising its earnings per share by a third in the next five years, according to data compiled by Bloomberg.
Airbus and Boeing may be both battling with order book discounting for the June 20 deadline for Gulf carriers to sell and trade A380s. Airbus has said it will manage the market no matter what happens.
Asked whether the Airbus Helicopters operation, acquired in 2011, would be worth more in the short term, Reilly said it was still “a great business” but that he would reinvest the $6 billion to improve commercial products including the McDonnell Douglas M/A 310-600 helicopter.
He added he would first see how the deal between his unit and Boeing works. A decision could be made as early as this month.
He declined to comment on whether Airbus would buy a stake in the troubled Sukhoi Aviation business.
Reilly said he expected more aircraft orders from South Korea and is keen to enter China to offset a slowdown in its aircraft order book. He also said Airbus could enter low-cost markets such as Morocco and Yemen.
During an economic slowdown, airlines are finding that they have to accept less-expensive aircraft than expected because the economy has slowed, while changing fuel-cost trends suggest Boeing’s 737 Max, produced at higher volumes, could offer more value.
“There’s a bit of headwind now,” Reilly said. “In six months time the question will be how much the economy has changed.”
“The impact from any changes in the economy will be disappointing, but the nature of the business at this stage means that we will continue to compete hard in good countries,” he said.
Reilly said he expected “big opportunities” in India and Germany, where there is limited new competition for years to come and airlines are likely to be quick to invest.
But he did not have time to turn his attention to those markets.
“We are close,” he said. “A number of big customers have told us that they need new helicopters and that is where we are right now.
“But we have in our backlog a significant amount of business so it’s not a major question.”