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Economy

Airbus doubles profits based on A320, rival to Boeing 737 MAX

media An Airbus A320 NEO, the rival to the Boeing 737 MAX which was grounded after two fatal accidents. Regis Duvignau/Reuters

European aerospace giant Airbus more than doubled its profits in the first half of the year, which it attributed to increased production of its A320 aircraft, the rival to the Boeing 737 Max, which were grounded in March after two fatal crashes in less than five months.

Airbus net profits reached 1.197 billion euros, up from 496 million euros in the same six-month period of 2018, according to the company, which released half-year results on Wednesday.

Second quarter profits increased by 72 per cent, driven by the ramp-up in production of the A320 and the transition to a more efficient NEO (New Engine Option) version.

Airbus delivered 294 A320 planes in the first six months of the year, out of a total of 389 commercial planes, up from 303 in the same period in 2018.

The results are in stark contrast to Boeing, which reported its biggest ever loss last week. The company warned it could be forced to stop producing the plane temporarily if it cannot return the 737 MAX to the skies.

Getting the aircraft back in the air will take time, said Boeing CEO Dennis Muilenburg on the second quarter earnings conference call: “We do have to go through a multi-regulator approval process and it’s a complex process and one that will take time to get done”.

Airbus deliveries

Airbus, meanwhile, company says it aims to deliver 890 commercial planes by the end of the year, though it warned that a dispute with the United States over government subsidies for aerospace companies would “could significantly affect the delivery of new Airbus aircraft and helicopters on the US market”.

The US is targeting European Union subsidies to Airbus at the World Trade Organisation, arguing that they harm the United States economically. The EU is bringing a similar case against the US for subsidies to Boeing.

The WTO has found that EU subsidies violate international trade rules, and the US is readying tariffs on EU goods in retaliation. The US Trade representative this week published a list of goods they would apply to, once the WTO rules on later this summer.

Airbus said that the EU could make a decision to impose tariffs on US products “at a later stage”, but it continues to “support an outcome through a negotiated solution”.

While 2019 is looking up for Airbus, orders placed are down. The company received net orders for 88 planes in the first half of the year, and the company faces production backlogs.

Air France orders

Air France-KLM said Tuesday it would buy 60 of the company’s new A220-300 planes, one of the airline’s biggest orders in years. It is part of a significant overhaul of its fleet, as the airline is looking to cut costs and compete against low-cost carriers by closing or reducing shorter routes and using smaller planes.

The company did not reveal the value of the Airbus order, but at list prices it would be worth 4.9 billion euros, though airlines usually negotiate discounts.

The company also said it would stop operating the double-decker Airbus A380, saying they were no longer cost-effective. Airbus had already stopped producing the superjumbo planes earlier this year after failing to secure any new orders

Air France-KLM’s ten A380s will be phased out by 2022, and the company is considering replacements, including the A350 long-haul plane, or Boeing’s787 Dreamliner.

CEO Ben Smith is said the A220s are less expensive to fly, while also "significantly reducing CO2 and noise emissions".

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