Airbus has more production capacity at its Mobile, Alabama, manufacturing campus for its A220 regional jet, but who will take delivery or make new orders is an open question as the airline industry struggles to generate business in the COVID era.
The European aircraft maker on Tuesday officially opened a final assembly line for the A220 and began production of the first U.S.-built A220 for JetBlue (NASDAQ: JBLU) after tugs pulled three main sections into the building.
The 270,000-square-foot hanger, which took 18 months to construct, houses five primary assembly stations where major airframe component assemblies are fused into a complete aircraft. Airbus actually began producing the twin-engine A220 in Mobile last August using space in the building where larger A320 planes are built, and new support hangers.
JetBlue is the second Airbus customer in the U.S. to have orders filled in Mobile. Delta Air Lines (NYSE: DAL) has orders for 45 A220-100s and 50 of the larger A220-300s. The airline, to date, has received 31 A220-100 aircraft, produced in Mirabel, Quebec, according to Airbus. The -300 variant has 130 seats. The first one is expected to be delivered from the Mobile plant this year.
JetBlue has ordered 70 A220-300 aircraft, all of which are to be made in Mobile. The first delivery is scheduled for the fourth quarter.
Airlines are eliminating as many capital expenditures as possible to preserve cash in the absence of passenger revenue. Popular tactics include canceling aircraft orders, deferring deliveries or postponing payments to manufacturers or leasing companies. Delta officials said last month they are negotiating with Airbus on how to defer deliveries or payments for 184 aircraft that are on order, but whether that will include planes being made in Mobile is unclear.
The expansion solidifies Airbus’ footprint in the U.S. as it continues to take market share from Boeing, which experienced a marked drop in deliveries after the 737 MAX was grounded by regulators in March 2019 to investigate two fatal crashes within a five-month span.
The facility puts Airbus closer to U.S. customers and helps them avoid new U.S. tariffs on imports of European-made aircraft. In January, Airbus announced plans to expand operations in Mobile. Boeing, which doesn’t have a regional jet in in its portfolio, last month terminated joint venture talks with Brazilian small-plane manufacturer Embraer.