Airbus is raising its profile with a $600 million Alabama site for single-aisle airplanes, its first U.S. assembly plant.
Airbus Chief Executive Fabrice Bregier is laying plans to draw level with Boeing in the United States, its rival’s home turf and the world’s largest aerospace market, starting with a new factory in Alabama.
It’s an aggressive move, considering the European plane-maker controls only about 20 percent of the U.S. market. That share will reach 40 percent as soon as carriers including American Airlines take delivery of Airbus planes on order.
Bregier’s team has set its sights on grabbing half a U.S. market that has traditionally favored the home player, even as the two manufacturers share the global market 50/50.
Airbus is raising its profile in the U.S. with a $600 million plant for single-aisle airplanes it inaugurated Monday in Mobile. The factory is only the second such plant it has built outside Europe. The other is in China.
“Our first U.S. facility has been years in the making,” Bregier head of Airbus Group’s airliner unit, told reporters on Sunday. “It is the most significant, game-changing incident in U.S. aerospace in decades.”
Airbus Group already builds helicopters in the U.S. and is scouting sites for a satellite plant on American soil. The company expects to be more visible in bidding for future defense contracts, and can envision using an expanded Mobile site for military work too, said Airbus Group Chief Executive Officer Tom Enders, who led an earlier attempt to beat Boeing for a contract to sell refueling tankers to the U.S. Air Force. The company holds an option to double the 116-acre site to accommodate future work.
“We are a large aerospace company, and should the situation arise where we have something competitive to offer the U.S. Air Force, for instance, this would certainly be a site where we’d consider doing something,” Enders said in a televised interview.
The first two aircraft already taking shape in the facility are A321s, the largest single-aisle models Airbus is counting on to wrest market share from Boeing. The jets, seating upward of 200 passengers, are becoming a mainstay of transcontinental flying by American, Delta, JetBlue and other airlines.
Asked if he were plotting a new midsize aircraft to counter the 757 replacement on Boeing’s drawing boards, Bregier nodded to the A321. “The aircraft exists already,” he said. “You don’t need to reinvent it.”
Most of the jets built in Mobile will be delivered to North American customers, Airbus said. Deliveries are due to start in early 2016 from the 53-acre facility, with the production tempo rising to four aircraft a month by early 2018.
Airbus also produces four A320s a month in Tianjin, China, which is poised to eclipse North America as the largest aviation market.
The first two jets, bound for JetBlue and American, are taking shape at the Mobile plant, whose nonunion workforce of 260 will swell over time to 1,000.
The plant and planes will be certified by European regulators rather than the U.S. Federal Aviation Administration.
“We’re producing on American ground a European product with American people,” said Timo Zaremba, who oversees product quality at the plant.
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Production costs and factory capacity are vital as Boeing and Airbus plot to boost output of single-aisle jets that serve as workhorses for the global airline fleet to upward of 60 aircraft a month.
Airbus currently builds the A320 at the same 42-jet pace as Boeing makes its 737.
The rivals are racing to reap profits from a near-record backlog of narrowbody-jet orders: 5,181 for Airbus to 4,253 for Boeing, according to data compiled by Bloomberg Intelligence.
Boeing assembles its 737 jets at a single factory in Renton, although the company is considering adding a plant in China where planes would be finished and delivered.
Airbus spreads the single-aisle work across three factories — in Toulouse, France; Hamburg, Germany; and Tianjin, China.
Now the Alabama plant will give Airbus greater flexibility to raise or lower output, while saving on land, energy and labor, said Kevin Michaels, vice president with the aerospace practice of consultant ICF International. Final-assembly labor costs represent about 10 percent of the total expense of building a jetliner, he estimates.
Suppliers are also expected to help Airbus build up in the U.S. by moving capacity there. France-based Safran, which builds engines for single-aisle jets together with General Electric, said its Aircelle unit will build a U.S. factory for engine nacelles, and the group will set up a new service center for landing gear, brakes and wheels closer to the Mobile facility.
If Airbus decides to hoist A320 production past 60 jets a month, it will add further capacity in Hamburg and consider doubling output in Mobile, provided the first three years go smoothly, Bregier said.
It will likely make a decision by the end of the year on whether to boost monthly rates to beyond the 50 planes projected by 2017, he said.
Over the next two decades, the aerospace company expects North American airlines to buy 4,800 single-aisle aircraft.
“We expect to get about half that total, if not more,” said Allan McArtor, chairman and CEO of Airbus’ North American subsidiary.