MOBILE, ALABAMA —With the potential of an economic slowdown on the rise, businesses around the world have been in preparation for such an event.
Airbus CEO Tom Enders told reporters at the company’s assembly plant in Mobile, Alabama on Wednesday that the success of past Airbus sales campaigns functions as a sort of a barrier against the ill effects of an economic downturn.
“Obviously we follow very closely what’s happening politically and economically around the world. We are a global business,” Enders said at a press briefing. “But different from any other businesses, we have a huge order backlog in most of our products and that serves as a buffer in terms of regional and national downturns.”
According to Enders, Airbus has experienced so many past years where the company’s order intake far exceeded the number of aircraft it could build. As result, the long-time executive says that people shouldn’t “sound the alarm” if Airbus has a year or two when they sell fewer planes than they build.
At the end of 2018, Airbus Commerical Aircraft had a global backlog 7,577 planes which will require more than half a decade to work through. Of the backlog, 925 planes are from US customers.
Instead, Enders says the focus should be on the company’s ability to deliver aircraft. After all, it’s when the airplane maker actually gets paid.
Even though an airline’s ability to pay may be hindered by an economic slowdown, Airbus has enough financially stable clients that deliveries shouldn’t be greatly affected.
“If you look at the Airbus A320, for instance, we have so much overbooking already on the delivery slots,” Enders told Business Insider. “During the last big downturn in 2008-2009, we had to shift a lot of delivery slots and postpone into the future for weaker airlines, on the other hand, we had a lot of airlines who were eager to get those earlier slots.
“Today we are in a situation where if someone orders (a narrow body) Airbus Aircraft they have to wait in a queue for five years and that’s not what people like,” he added.
As a result, during an economic downturn, financially strong carriers with an immediate for airplanes will be able to get them in a more timely fashion while those who are less stable can delay delivery.
However, Enders went on to clarify that this buffer doesn’t exist for all sectors of its commercial aircraft business. The A380 superjumbo program, for example, does not have an overbooking issue.
Enders was in Mobile for the groundbreaking of the new Airbus A220 production line. It will be located next door to the company’s existing Airbus A320-family assembly plant.
Wednesday will likely Enders’s last big event in Mobile as Airbus CEO. The company announced last October that he will step down from the top job in October 2019 with current Airbus Commercial Aircraft president Guillaume Faury taking over as the new chief executive.