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Airbus’s Plan to Ramp Up Production of Bestselling Jet Hits Snags

World’s biggest plane maker tempers guidance on plans to dramatically increase production of A320s

Airbus SE tempered expectations for sharply boosting production of its bestselling jet, blaming supply-line challenges that threaten its ambition to rapidly widen a market-share advantage it opened with Boeing Co. BA -2.44% during the pandemic.

The plane maker reported record profit Thursday and said it would reinstate its dividend, benefiting from still-robust demand for its commercial airliners. But it dialed back the likelihood of dramatically boosting future production rates for its A320, the single-aisle rival to Boeing’s 737 MAX.

The 737 MAX suffered a long grounding after two deadly crashes, forcing a short-term halt to production. Then, amid the pandemic, Airbus pressed airline customers to honor contracts, further boosting its share of the single-aisle market.

The European plane maker has been bullish on the aviation sector’s eventual recovery, after pandemic travel restrictions hobbled many airlines. It told suppliers last year to be ready for a quick production ramp-up, promising to push out 65 A320s a month by the summer of 2023. It also said it had asked suppliers to explore whether it could raise that to 75 a month by 2025.

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A More Conservative Airbus Can Gain Altitude

If the world finally moves on from Covid-19 this year, the plane maker’s cautious financial guidance could prove easy to beat

A move by Airbus to fly under the radar could be a wise one.

Shares in the European plane maker initially rose Thursday, after it released encouraging financial results for the final quarter. Operating earnings were 11% above the median analyst estimate. Free cash flow, which is even more important for aerospace firms, was almost twice as high as expected for the quarter, and amounted to €3.5 billion, equivalent to $4 billion, for 2021 overall. That echoes a better-than-expected cash performance at Boeing, its American rival.

Yet Airbus stock edged down as European trading got under way. The broader travel sector came under pressure amid fresh jitters about a potential war in Ukraine, but it may also have to do with the company’s somewhat underwhelming guidance. Targets for 2022 include flat free cash flow and the delivery of 720 commercial aircraft.

While these aren’t bad numbers, some investors were expecting more. Airbus managed to surpass its 2021 goal of 600 planes by 11 units, and was delivering 860 planes before the pandemic. Executives sounded cautious when addressing analysts Thursday.

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How the U.S. Messed Up Its New 5G Rollout: ‘It Wasn’t Our Finest Hour’

Longstanding disagreements between federal agencies over potential risks to aircraft remained unresolved in the days leading to the 5G debut

The Biden and Trump administrations had years of warnings. But the government failed this week to avoid a collision between U.S. telecom companies and airlines over the rollout of new 5G cellular networks.

That failure, rooted in longstanding disagreements over potential risk and a lack of cooperation by U.S. regulators, led to a last-minute scramble that threatened the cancellation of thousands of flights and raised tensions between two powerful industries.

Since 2015, the Federal Aviation Administration has questioned whether decades-old aviation equipment would be disrupted by new cellular signals. The risk to aircraft from new 5G services has been dismissed by the telecom industry and its regulator.

Yet the FAA, still sifting through a flood of wireless-company data, was altering flight-safety instructions in the days leading up to the 5G rollout. Boeing Co. , meanwhile, began talking last weekend with users of its 777 jets about possibly halting flights into major U.S. airports ahead of the 5G debut. Along with questions about shifting FAA restrictions, that set off days of panicked calls among airline chiefs and White House officials, people familiar with the matter said.

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Boeing Adds $450 Million to Air-Taxi Effort

Wisk joint venture with Google co-founder Larry Page is developing pilotless electric aircraft

Boeing Co. said it is investing a further $450 million in its air-taxi joint venture with Google co-founder Larry Page, developing small, pilotless aircraft for short passenger hops in and around cities.

The company’s Silicon Valley-based Wisk venture joins an expanding crowd of electric air vehicles that have attracted billions of dollars in new funding over the past year. Some aim to start service by the middle of the decade, though those efforts hinge on an evolving regulatory framework to ensure passenger safety.

Rival plane makers Airbus SE and Embraer SA are developing their own electric air taxis, alongside other startups that have attracted interest and investment from airlines, private jet operators and aircraft leasing companies. The U.S. Air Force is also involved with developing flying taxis for military use.

Excerpt from WSJ
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