Airbus cuts industrial and financial targets

Cutting output: Visitors are seen around Airbus A380 (background) and Airbus A321 at an aerospace exhibition near Berlin. Airbus has lowered its forecast for deliveries this year to around 770 jets from around 800. — AFP

PARIS: Airbus softened key industrial and financial targets and took a hefty €900 charge for its troubled space activities as Europe’s largest aerospace group sought a clean slate approach to supply disruptions and commercial risks.

Yielding to growing scepticism among suppliers over its plans for jet output, Airbus lowered its widely watched forecast for deliveries this year to around 770 jets from around 800.

It also tempered plans to raise output of its best-selling A320neo family, by delaying the date at which it expects to reach a record production speed of 75 jets a month to 2027 from 2026. That compares with an estimated 50 jets a month now.

As a result of the lower delivery forecasts, which imply annual growth of 5% instead of 9%, Airbus lowered its main financial targets for 2024.

It now expects underlying operating income of around €5.5bil, instead of a range of €6.5bil to €7bil, and free cashflow of €3.5bil instead of €4bil.

“We are facing headwinds right now; we have to bite the bullet,” Airbus chief executive officer Guillaume Faury told analysts.

The downward revision in industrial forecasts comes weeks after Reuters first reported that Airbus was facing a new set of output delays as it grapples with increased parts shortages.

Industry sources said Airbus concluded it had exhausted its spare margin for deliveries after falling short in the first five months and then starting June on a weak note – with barely half the month’s anticipated total having been delivered so far.

The aerospace industry has been struggling to rehire workers and stabilise supplies after the pandemic left many suppliers with weak balance sheets.

As the No.1 plane producer, Airbus has borne the brunt of the problem as rival Boeing faces regulatory curbs and an internal crisis, but some experts and suppliers – including engine makers – have long voiced doubts about its plans, saying they were too ambitious.

One senior supply chain executive questioned whether the latest reductions went far enough.

Faury appeared to turn the tables, however, saying supplies of engines for its best-selling A320-family of narrow-body jets had deteriorated “significantly” in recent months.

The shortfall, he said, affects both engine makers for the A320neo narrow-body family, which competes with the Boeing 737 MAX and accounts for most of Airbus’ cash and profits.

Faury said engine makers would have to “face the consequences” of any delays, apparently referring to penalties. — Reuters

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