Catching Up

In June, at Airbus’ Innovations Day in Hamburg, Fabrice Bregier, the company’s president and chief executive, lambasted suppliers, declaring: “Cabin suppliers, not all of them, but a majority, are very good at marketing and selling, but less good at designing, and some are even crap at producing. Put all that together and this is not easy.”

Speaking in November at a briefing on the sidelines of the annual Assembly of the Association of Asia Pacific Airlines (AAPA) in Manila, Leahy said: “We are still working that out. On the BFE suppliers like seats, galleys and that sort of thing we are working through these problems and they are getting back under control. And then on our ramp-up of the neo I think it is no secret that Pratt & Whitney has stumbled on their ramp-up of the GTF engine. We believe this will stay in flux for at least another year as they try to catch up with what they have done. I’m not saying there is a 12-month delay. There are several months’ delay on many of the airplanes but until Pratt can sort things out it’s probably about twelve months to catch up with where they should have been.”

Earlier this year Pratt & Whitney denied there were any major issues with the PW1100G engine, saying that it was neither a cooling nor a technology problem. President of commercial engines Greg Gernhardt said: “Quite honestly, what we are incorporating are some very minor changes in the number three and number four damper in the engine, and its machining. We are changing the dimension by eight thousandths of an inch. It’s a very simple change. We are tweaking the software in the engine just to optimize the start times.” Nevertheless, the changes have continued to cause delays in the schedule of engine deliveries to Airbus.

Leahy explained the planemaker has taken steps to cope with the problem. “What we have been able to do from a production standpoint is switch some of the neos that we were going to build as neos back into ceos so we can keep production ramping up. Some people are willing to take ceos, sometimes the same airline, sometimes not. Some (customers) will say, no I am going to wait (for the neo) but it has still opened up a slot that could be a ceo and then we sell it to someone else. So our ramp-up to rate 60 remains in track. It becomes annoying if you are building gliders though. So we have to make that plane a ceo or make it a neo going forward”.

One thing Leahy is adamant about is that when it comes to the delivery delays caused by the engine hang-up, Airbus won’t be copping the blame and forking out compensation. “I can’t get into the contract details but most times an engine delay is not the airframe manufacturers fault. It’s not like the (Boeing B737) MAX where it’s one engine and airframe and that’s what you buy. You don’t have a choice. The customers all know with the neo they had an engine choice. We didn’t tell them which way to go. They selected either CFM or Pratt. So to a large degree, frustrating as the situation is, if there’s compensation they want, their beef is with the engine-maker.”

He adds that, looking on the bright side, the GTF is a good engine. “It’s doing better on fuel burn than we even anticipated. We say you get a 15 per cent reduction in fuel burn but some of the early operators are saying it’s like 1 per cent better than that. So there’s good news there in the market place. These are planes the airline will keep for 12-15 years and some will keep them for 20-25 years so the fact there might be several months’ delay is annoying, especially when you’re facing it right in front of you but they know in the longer term the reliability and efficiency of the program is what counts.”

In the meantime, Leahy says Airbus will be building more planes in 2017 than it did in 2016 and it will also deliver more planes, despite industry analysts suggesting commercial jet sale market is softening. “There is a major disconnect with some of the people who issue forecasts and write that orders are softening and its sort of implicit that means deliveries will soften too. No, it does not,” insisted Leahy. “This model for aviation isn’t the same as for an auto manufacturer where you get a bunch of forecasters who sit around in a room and decide how many cars they are going to build next year and if they get their numbers wrong all of a sudden they’re not selling them, you dramatically cut production.

We are taking orders for airplanes to be built two, three, five, eight years out in the future. We have a record backlog now of about 6,700 planes and if you are building airplanes at let’s say 650-750 a year over the next couple of years, do the math, that’s like eight to ten years’ worth of orders in your pocket. So, will orders be softer next year? I think they are soft this year and they’ll remain soft next year in terms of orders. Will our production increase next year over this year? Absolutely it will. Will we deliver more airplanes next year than this year? We absolutely will.”

Just days before the first flight of the A350-1000 version of Airbus’ newest wide-body, Leahy also commented on pressure from Singapore Airlines for the company to build a further stretched version. The answer right now is a definite “No”. “Singapore is the one who’s pushing the most in the market place right now but we haven’t made a final determination,” said Leahy. “Singapore is a very important customer.

They say we’ve got a fantastic airplane in the air and we ought to commit to it sooner rather than later. We listen very carefully to advice from airlines like Singapore but we can’t launch it for just one customer. Other customers in the world are saying, gee, do we really want to be ordering an airplane now for delivery in 2021 or 2022. So it’s an interesting debate and maybe SIA decides to put their decision off for six months or whatever. You’d have to ask them. But at this juncture we are listening to the market, studying the market.

We know we could build a very good airplane for that market. The question is: is now the time to commit?” He agreed the situation with the A350 stretch was similar to dilemma with launching a re-engined A380 neo, which Emirates Airline president Tim Clark was pushing for. “As we told Tim, we think it’s inevitable the A380 neo will be built. The question is what’s the timing of it? Tim realized that and said well, OK. And fuel prices went down. I think if fuel prices were still $100 a barrel Tim would be out shouting for an A380 neo. If you’re below $50 a barrel you don’t need it just yet.”

Meanwhile, it looks like being a busy Christmas for Airbus’ workers in Toulouse as they strive to get the 50 A350s out the door promised for delivery this year. “We are still on track to deliver 50 A350s this year but we hoped to have deliver a few of them a little earlier. We will be very close if we don’t make it and some of them will actually be delivered between Xmas and New Year.”