Airbus slows production ramp-up of best-selling jets

Airbus has slowed production ramp-up of its best-selling jets due to ongoing supply chain disruptions as the aerospace industry struggles to regain pre-pandemic productivity levels.

Guillaume Faury, chief executive officer, said the world’s largest aircraft maker failed to meet delivery targets as supply chain bottlenecks hampered the revival of the aviation market.

“The situation was pretty frustrating last year. We were not satisfied with the number of aircraft that we delivered last year. It will take us two years to achieve what we planned to do in one year,” he told analysts during a call to discuss full-year results.

The passenger plane maker said it will adjust the monthly production rate target of its A320 family of single-aisle jets to 65 by the end of 2024. The target of 75 per month is being pushed back to the end of 2026. Both targets are about a year later than originally forecast.

Airbus has increased its delivery target for this year to 720 aircraft – up from the 661 delivered at the end of 2022 – but in line with its original estimate for last year that it had to be adjusted twice due to pandemic shortages of raw materials and labor as well as supply problems related to the Ukraine war.

Airbus boss Guillaume Faury

Airbus boss Guillaume Faury: “Our productivity today is much lower than before Covid” © Charly Triballeau/AFP/Getty Images

At the same time, the company will ramp up its production of larger, widebody aircraft as international travel returns. Airbus will increase the monthly production rate of its A350s from six to nine per month by the end of 2025.

Production of the A330neo jet will increase from three a month to four next year.

Although the situation in the supply chain “hasn’t gotten any worse,” Faury said he’s not sure when the industry will return to pre-Covid-19 levels of productivity.

“Our productivity today is much lower than before Covid. It comes from many different sources. This is a very disrupted environment that makes us very inefficient. . . When will we get back to 2018 levels of productivity? I don’t know,” he said.

Faury said the company was producing about 45 A320 jets a month late last year. Airbus will average around 50 this year, he added, stressing that the company believes in the revised targets given its much better understanding of the environment.

Demand for air travel has surged as countries lifted pandemic-era restrictions, prompting airlines to order new planes. Stricter emissions reduction targets are also forcing airlines to clamor for more fuel-efficient aircraft.

Airbus this week secured an order for 250 aircraft from Air India, including 40 of its A350 widebody jets.

The Toulouse-based aerospace and defense group is targeting adjusted operating profit of €6 billion for 2023.

The result, driven by higher commercial aircraft deliveries and positive pension commitments, pushed the group’s shares up 4 percent to €123.46 early Thursday afternoon in Paris.

Free cash flow before mergers and acquisitions is expected to decline to 3 billion euros from 4.7 billion euros in 2022, helped in part by favorable foreign exchange rates.

Consolidated sales increased by 13 percent to 58.7 billion euros in the reporting period, of which defense activities contributed 11.5 billion euros. Airbus also booked a €477 million fee for the ailing A400M military transport program.

The company is proposing a 20 percent higher dividend of EUR 1.80 per share.

Airbus announced on Wednesday that German chief executive Thomas Toepfer had been appointed as the next chief financial officer, effective September 1. Toepfer, chief financial officer at German polymers maker Covestro, will succeed Dominik Asam, who is stepping down next month. Airbus slows production ramp-up of best-selling jets

Adam Bradshaw

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