A320 build rate, Alabama presents proposal to Airbus
Airbus won’t increase the production rate on the A320 family until introduction of the NEO and it’s now become public that Alabama has presented a proposal to Airbus for an assembly plant there.
Airbus disclosed the plan to freeze the build rate at the previously announced 42/mo during the Airbus Innovation Days we attended last week. Aviation Week has this detailed story.
We alluded to the prospect of a decision by Airbus by year end for an assembly site in Alabama in one of our reports of the Innovation Days. Yesterday, it became public that Alabama has presented a proposal to EADS, parent of Airbus.
Accordingly, here is our take: we think Airbus (EADS) will eventually make the decision to open an A320neo assembly site in Mobile. Here’s why:
- Going beyond rate 42 probably means Hamburg, Toulouse and Tianjin are out of room;
- Airbus wants to increase its US dollar-based footprint to reduce exposure to the volatility of the Euro;
- A US site might help US sales but would make it easier to sell a “Made in America” campaign to the Defense Department for future contracts (expanding Mobile into DOD work); and
- Opening Mobile in connection with neo would open nearer-term delivery slots to compete with the 737 MAX and help worldwide sales availability.
We think the odds are better than 50-50 but it’s tough to handicap this.