Airbus mulls A320 output hike to 50/mth from 2017 -source

(Adds details, background)

By Tim Hepher

PARIS, Feb 24 (Reuters) - European planemaker Airbus is talking to suppliers about the possibility of raising production of its popular A320 family to 50 jets a month as early as 2017, narrowing a gap with rival Boeing (NYSE: BA - news) , a senior industry source said on Tuesday.

Airbus has asked suppliers to be ready to adjust to production of 48 aircraft a month during 2016, rising to 50 a month in 2017, the source said, asking not to be named.

The increase would stretch an existing target that calls for 46 of the single-aisle jets a month by the second quarter of 2016, up from a current rate of 42. There can be a lag between supplier schedules and aircraft production.

No final decision has been taken, and it remains unclear, following an internal debate at the planemaker over the timing of output increases, whether Airbus Group (Swiss: AIR.SW - news) will announce new levels alongside its 2014 results on Friday.

A spokesman for Airbus declined to comment.

Airbus jet division Chief Executive Fabrice Bregier last month declared the supply chain "stable" in a sign of potential output hikes, but acknowledged differences between sales and production teams about when to take the next step.

He promised a decision by June.

Another industry source said it was not a matter of 'if' but 'when' Airbus would increase output despite growing analyst warnings that the commercial aerospace cycle has peaked.

Airbus shares were down 1.6 percent at 52 euros by 1037 GMT.

Raising output involves an orchestrated effort by hundreds of suppliers just as the planemaker embarks on the delicate task of switching to a revamped A320, starting late 2015.

Airbus and Boeing have been battling for market share between their best-selling models since announcing fuel-saving upgrades earlier this decade. They are now locking in production plans to translate orders into revenue.

Boeing last year announced plans to raise production of its 737 model to 52 a month in 2018 from 42 now. It plans to reach 47 a month in 2017. Industry sources say it has started consulting suppliers on whether they could eventually handle 58 a month.

The medium-haul jets are a significant source of cash for both companies.

Airbus is also reviewing production of the larger A330, which faces competition from Boeing's 787 Dreamliner.

It makes 10 A330s a month and plans to trim this to nine. Analysts believe it could have to cut to as few as six. (Reporting by Tim Hepher; Editing by James Regan)