January 19, 2018 / 7:40 AM / a year ago

UPDATE 1-Airbus says supplier bottlenecks easing as deliveries rise

* Airbus says cabin supplier Zodiac has addressed quality issues

* Backlog in A320neos should be cleared by mid 2018

* Emirates A380 order allows “efficient” production rate (Adds new quotes from Airbus executive, details)

By Tim Hepher

NANTES, France, Jan 19 (Reuters) - Key suppliers to Airbus are overcoming problems blamed for delays in deliveries of passenger jets, allowing the European planemaker to resume increases in planned production for its newest models, a senior Airbus executive said.

Seats and cabins supplier Zodiac Aerospace is running smoothly after an industrial crisis that delayed Airbus A350 deliveries in 2016, Airbus Programmes Head Didier Evrard told reporters.

“In 2017 we had very few problems: Zodiac considerably improved its operational performance, as did other suppliers. This main reason for the blockage was resolved,” Evrard told reporters.

Zodiac, which is in the midst of being taken over by France’s Safran after repeated delays and profit warnings, broadly addressed problems of quantity in the first half of 2017 and quality during the second half, he said.

A separate backlog of about 30 undelivered A320neo-family jets, which have been parked in Toulouse and Hamburg waiting for engines, should be cleared by mid-year, he added.

The French engineer and former missile maker also hailed a provisional order for at least 20 A380 superjumbos by Emirates, handing a reprieve to the world’s largest airliner after poor sales.

Airbus is expected to halve production of the double-deck plane to six a year as part of the deal, which Airbus hopes will set a floor production level that will allow it to shop for more sales. But many aerospace analysts question whether it will make money at that rate.

Asked about the breakeven production level, Evrard said, “I won’t say it is 6 (a year). I don’t say it is profitable or not profitable, but consider it an efficient rate.”

Airbus plans to produce 12 A380s this year and eight in 2019. The company has not yet formally decided to cut output below eight, he added.

Airbus has made significant changes to the production line allowing it to cut A380 costs, including reducing factory space and fewer assembly stations, Evrard told journalists visiting a fuselage parts factory in western France.

Evrard said Airbus was in no hurry to decide whether to bring production of nacelles for LEAP engines in-house, matching a previous decision to take over similar work carried out by Pratt & Whitney on its own engines.

Airbus, which has been in talks with France’s Safran about reallocating the work for several months, nonetheless believes it has contractual freedom to act if it decides to go ahead with the possible transfer, he added.

The talks are seen as the latest example of manufacturers vying to take over high-value work carried out by suppliers in order to boost margins or get hold of specific technology. (Reporting by Tim Hepher; Editing by Richard Lough)

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