February 26, 2020 / 4:09 PM / a month ago

UPDATE 1-Plane parts maker FACC says no big impact from coronavirus so far

* Coronavirus no reason to cut forecast

* Production at China site at 90% of capacity (Updates throughout)

By Kirsti Knolle and Alexandra Schwarz-Goerlich

VIENNA, Feb 26 (Reuters) - Plane parts maker FACC has not seen a big impact from the coronavirus outbreak so far, its CEO said on Wednesday.

Airlines have been hit hard by a drop in travel due to the virus, which has killed more than 2,700 people mostly in China, fuelling speculation of a downturn in orders for new planes.

Air France-KLM and Lufthansa have both cut their budgets due to the shut-down of several China routes.

However, FACC Chief Executive Robert Machtlinger remained cautiously optimistic.

“From today’s perspective, we do not see an impact (from the coronavirus outbreak),” he told Reuters.

FACC makes components for wings, tail assemblies and fuselages as well as engines and cabin interiors for planemakers including Airbus and Boeing.

The company has already had to deal with fears of a slowdown in demand linked to U.S.-China trade tensions, resulting in a 37% drop in third-quarter core profit.

But Machtlinger said airlines still wanted new planes.

“We do have a good order situation,” he said, adding FACC’s cabin interior and engine production units in particular were benefiting from new orders.

Production at the Zhenjiang site in China, which is operated by FACC, has been running with about 90% of staff for about two weeks now, and it has enough stock for almost two months, Machtlinger said.

He said the site was constantly receiving deliveries from European and American suppliers and there had been no problems so far in delivering its parts via ship.

Airbus has also played down the potential hit from the virus outbreak, endorsing traffic growth forecasts that assume no major disruptions.

Austrian headquartered FACC, which is owned by China’s Aviation Industry Corporation (AVIC), has a medium target of an annual revenue growth of 5%. The margin on its earnings before interest and tax (EBIT) is expected to increase to 8-10% by 2023 from 5.2% in 2019. (Writing by Kirsti Knolle; Editing by Jan Harvey and Mark Potter)

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