Airbus plans to open factory in US
Airbus is close to finalising plans for its first aircraft factory in the US, in a move that would dramatically ramp up its battle with Boeing.
The European aircraft maker is considering adding to its single aisle aircraft factories in France, Germany and China by locating one in Mobile, Alabama.
The move could involve an investment of several hundred million dollars, and underline how Airbus is keen to improve its sales in Boeing’s home market, where airlines are placing large aircraft orders to replace their ageing fleets.
“We have long studied our options to increase our market presence [in the US],” said an Airbus spokesman. “We have no final decision yet.”
Fabrice Brégier, Airbus’s new chief executive, recently visited Mobile with Tom Enders, chief executive of EADS, the aircraft maker’s parent company.
Mr Brégier, in a recent interview with the Financial Times, stressed the importance of the US market to Airbus, noting how airlines there were renewing their fleets.
He said he wanted to continue Mr Enders’ strategy of enlarging Airbus’s international operations, highlighting its narrow-body factory in Tianjin, China, which opened in 2008.
Boeing has a strong lead over Airbus in the US, where the European manufacturer estimates its market share is below 20 per cent.
Airbus expects the US market to be the second most valuable after China over the next 20 years, and the company underlined its ambitions last year by securing an order from American Airlines, the third-largest carrier by revenue, for 260 A320 narrow-body aircraft.
The deal marked the first time that Airbus had broken into American’s all-Boeing narrow-body fleet.
United-Continental Holdings, the largest US carrier by revenue, is preparing to place an order for at least 100 single aisle aircraft.
Airbus has an engineering centre in Mobile, and the site could now be the location for the aircraft maker’s fourth final assembly line making A320 aircraft.
Mobile would also have been the location for the production of Airbus’s A330 wide-body jets that EADS hoped to supply to the US military as aircraft refuelling tankers.
However last year, amid controversy, Boeing beat EADS to the $35bn contract with the US Air Force, and the A330 factory plans did not go ahead.
Making aircraft in the US would help reduce Airbus’s currency risk by increasing its exposure to costs denominated in US dollars.
Airbus’s costs are principally in euros, but it sells aircraft overwhelmingly in dollars. When the euro strengthens against the dollar, EADS’s earnings are reduced.
The euro’s weakness amid the eurozone sovereign debt crisis should help EADS’s earnings, although analysts said much would depend on its hedging strategy.