Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
After seeing demand battered by the pandemic, aerospace manufacturer Airbus says the recovery is beginning.
It’s alerted its suppliers to prepare for a steep acceleration in production of its popular A320 single-aisle passenger jets, as it sets target above pre-pandemic levels in two years time.
The European aerospace group has confirmed plans to increase A320 output to 45 jets per month in the last quarter of this year, from 40 at present.
It has also set suppliers a new target — 64 a month by the second quarter of 2023, and wants to ensure it has the long term capacity in place. That’s above the 60/month peak it hit in 2019, before Covid-19.
Airbus says it expect the commercial aircraft market to recover to pre-COVID levels between 2023 and 2025, led by the single-aisle segment.
Guillaume Faury, Airbus CEO, says this morning:
“The aviation sector is beginning to recover from the COVID-19 crisis”
Looking further ahead, Airbus is anticipating a “continued recovering market”. It also asking suppliers to prepare for production to expand further to 70 by the first quarter of 2024.
And long term, it’s also investigating whether it could boost production to 75 by 2025.
This steep ramp up looks like a sign of confidence in the recovery of the aviation industry from the pandemic – with Covid-19 vaccinations enabling a pick-up in international tourism.
Faury says Airbus wants its suppliers to be ready for the pick-up in demand.
“The message to our supplier community provides visibility to the entire industrial ecosystem to secure the necessary capabilities and be ready when market conditions call for it.
In parallel, we are transforming our industrial system by optimising our aerostructures set-up and modernising our A320 Family production facilities. All these actions are set in motion to prepare our future.”
Airbus is also slightly increasing its production goals for its small A220 jet, and the wide-body A350.
- A220 Family: Currently at around rate five aircraft per month from Mirabel and Mobile, the rate is confirmed to rise to around six in early 2022. Airbus is also envisaging a monthly production rate of 14 by the middle of the decade.
- A350 Family: Currently at an average production rate of five per month, this is expected to increase to six by autumn 2022.
- A330 Family: Production remains at an average monthly production rate of two per month.
Also coming up today
Big Oil is reeling from a series of blows yesterday, over their failure to move faster to tackle the climate emergency.
US oil giants ExxonMobil and Chevron both suffered shareholder rebellions, with 61% of Chevron shareholders supporting a resolution to set targets to reduce all of its emissions. Activist hedge fund Engine No. 1 got two directors elected to the board of ExxonMobil.
And in a landmark case in the Hague, a Dutch court ruled that Royal Dutch Shell must reduce its global carbon emissions by 45% by the end of 2030.
Dan Gocher, Director of Climate & Environment at the Australasian Centre for Corporate Responsibility (ACCR) says these developments have “massive implications”.
“This news is nothing short of extraordinary, and it will have massive implications for the Australian oil and gas industry.
“Chevron, ExxonMobil and Shell are three of Australia’s largest oil and gas producers, and therefore three of our largest carbon polluters.
“All three companies will now be under enormous pressure from both shareholders and the wider public to cut emissions, and cut them fast.
European markets are rather subdued, after a lacklustre day’s trading in Asia which saw Japan’s Nikkei drop 0.3% and the Hong Kong Hang Seng dip 0.2%.
Jeffrey Halley, senior market analyst for Asia Pacific at OANDA, says:
Some of the week’s froth has come out of the markets in Asia today, with equities edging lower, along with energy and precious metals and our good friends, the cryptocurrency space, while the US Dollar edged higher after an impressive rally overnight.
All the financial markets space, the price action looks corrective, rather than a structural turn, as short-term momentum ran out of the “inflation is dead, buy everything” that has swept markets this week.
A flurry of US economic data might move the dial later, with new durable goods orders, weekly jobless claims figures, and a second estimate of US growth in the first quarter.
- 9.30am BST: ONS weekly realtime economic activity indicators
- 12pm: Bank of England policymaker Gertjan Vlieghe Speech: What government bond yields can tell us about future growth and inflation’
- 1.30pm BST: US weekly jobless figures
- 1.30pm BST: Second estimate of US GDP for Q1
- 1.30pm BST: US durable goods orders for April
- 3pm BST: US pending home sales for April