US Tariffs Forces Airbus To Increase US Production Of Its A320 Planes

After the United States decided to impose tariffs on Europe-made planes with a resultant threat that the costs of the planes would increase for those US customers who has purchased aircraft from the European plane maker Airbus, the company has announced that it had decided to increase production of its A320 narrow-body jetliners that are made in the US at its Mobile, Alabama factory. The company announced that starting in 2021 the company will increase production of the planes from the current rate of five crafts a month to seven crafts a month.

This decision follows the European plane maker becoming the largest aircraft manufacturer of the world by overtaking the US plane manufacturer Boeing which is reeling under the impact of the grounding of its 737 Max planes worldwide following tow fatal accidents within a span of just five months.

A spokeswoman for Airbus said that the company is also trying to keep pace with rising demand pressures for its planes, which was also described as one of the major reasons for its decision to increase the production of place in the US. A number of production issues – including engine issues by General Electric, has delayed that delivery of Airbus A320 jets which has troubled some of the big customers of Airbus such as JetBlue Airways.

After the increase in production of the A320 at the company’s Mobile plant in 2021, the total production capacity per month for planes of Airbus’ A320-family across its four production plants will touch 63 planes.

The company said that there would be 275 additional jobs over the next year the Mobile factory because of the increase in the production of the A320 as well as that for the new jobs related to the production plans for the A220 — a smaller narrowbody plane.

The decision to impose tariffs on planes made by Airbus was made by the US government in October following a decision of the World trade Organization going in favour of the US over a case relating to subsidies given by European governments to Airbus. The case had been going on for more than 15 years.

With respect to the single-aisle jets, there is a huge backlog of deliveries for both Airbus and Boeing which runs into the middle of the next decade. These single-aisle planes are in demand primarily for short- and medium-haul flights. However deliveries of the planes have been halted by Boeing following the second of the two fatal crashes last March which resulted in airline regulators globally deciding to ground the 737 Max planes. Earlier this month, Boeing also suspended production of the 737 max planes because it fears that the regulators will not give it permission fly the plane commercially anytime soon despite the company expressing confidence a number of times of obtaining an early green signal from regulators.

Airbus had a backlog of more than 6,660 narrowbody planes as of the end of November.

(Adapted from CNBC.com)

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