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15 May 2006
15. May 2006 Commercial Aircraft

Airbus launches new titanium supply strategy


Airbus has signed agreements with major suppliers to balance and secure the supply of titanium to meet long-term requirements for its ramp-up in production, in particular for the A380. The supply contracts were signed with RTI International Metals, Inc., of the United States, Russia's VSMPO and UKTMP in Kazakhstan.

Airbus has announced the deployment of a new titanium supply strategy on a global basis in order to balance and secure supply for the next 5 to 10 years. The overall Airbus ramp-up, and in particular for A380 production, requires an increased supply of titanium for Airbus and its suppliers that has now been secured through revised and new supply contracts. The scope of supply under these contracts covers the direct needs of Airbus and EADS, as well as a growing volume of products for both their sub-tiers, in particular forging houses.

RTI International Metals, Inc. (U.S.) is a historical Airbus partner in titanium supply, having been the single source for Airbus in the early days of titanium use in its aircraft. A new contract signed with RTI on 9 May for a period up to 2015 sees its position reinforced with Airbus, as well as on the worldwide marketplace, through a significant capacity expansion plan -- making RTI a key Airbus supplier in this area.

VSMPO (Russia) maintains its position as major titanium supplier to Airbus with an allocation accounting for 55% of Airbus and EADS needs in titanium, and follows up on the existing contract in place since 2001. A new 5-year contract, which also was signed with VSMPO on May 9, allows Airbus to benefit from VSMPO's overall expansion plan and further strengthens the excellent relations between Airbus and VSMPO.

A breakthrough in terms of how Airbus manages the titanium supply chain has been reached through a contract with sponge supplier UKTMP in Kazakhstan. This development provides complete vertical integration for titanium manufacture, resulting in both supply chain security and cost control. Historically, sponge supply has been managed independently by the titanium producers and has always represented a cost variable subject to market factors. The sponge deal will provide synergy for contract with RTI, which does not have its own sponge production capability like VSMPO-Avisma. This approach will provide important advantages in terms of price stability and volume securisation.

To complete the global picture, negotiations are on-going and being finalised with suppliers from China and Japan for both semi-finished products and sponge, allowing Airbus to be secured for its implication in possible future developments in these markets, and benefiting from low cost alternatives in countries such as China.

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