Airbus says it has plenty to do to reach 800 deliveries target

A320neo with Pratt & Whitney engines. (Airbus)

Airbus has reaffirmed its full year guidance of 800 aircraft deliveries in calendar 2018 as it works to overcome engine production issues that have hampered its A320neo narrowbody program so far in the current year.
The global aerospace giant said on Friday (European time) it had delivered 121 aircraft in the three months to March 31, comprising 95 A320 family aircraft, eight A330s, 17 A350 XWBs and one A380.
This was 15 commercial aircraft, or 11 per cent, fewer than the 136 delivered in the first quarter of 2017.
The reduction in deliveries was flagged at the company’s full year results handed down in February, when it highlighted the engine production issues that were impacting its A320neo production line.
Airbus chief executive officer Tom Enders said there was “plenty to do this year to reach the target of around 800 commercial aircraft deliveries”.
“The first quarter performance reflects the shortage of A320neo engines and back-loaded aircraft deliveries as we indicated in the full-year disclosure,” Enders said in a statement.
“It’s a challenging situation for all but based on the confidence expressed by the engine makers and their ability to deliver on commitments, we can confirm our full-year outlook.”
Pratt & Whitney’s PurePower PW1100G geared turbofan is one of two engine options available to A320neo customers, alongside the CFM International LEAP-1A.
In early February, Airbus said an issue had been identified on a limited number of recently-delivered Pratt & Whitney GTF engines affecting the high pressure compressor aft hub. That had led to some aircraft being grounded and some deliveries postponed.
Meanwhile, there have also been some maturity issues on batches of the LEAP-1A engine.
Airbus chief financial officer Harald Wilhelm said the company has started to receive new engines from Pratt & Whitney with a knife-edge seal fix.
“The deliveries have resumed. The engines are coming back,” Wilhelm said during Airbus’s first quarter results presentation.
On the LEAP-1A engine, Wilhelm said Airbus was working closely with CFM on the issue.
“They are working to catch up on production delays they have encountered,” Wilhelm said.
“We monitor and chase that obviously very closely. The important thing I would say however, the engine guys are progressing and we see that all in all they are on track for the plans that we talked about two months ago and on that basis we continue the ramp up plans and we are getting ready for a high number of deliveries in the second half of the year.”
Locally, the Qantas Group has 99 LEAP-powered A320neos on order for its Jetstar low-cost carrier operations. In February, Qantas announced Jetstar would receive the first of 18 long-range A321neoLRs from mid-2020.
Meanwhile, Air New Zealand has ordered 13 A320neo family aircraft – comprised of nine A320neos and four A321neos – powered by the PW1100G and due for delivery at some point in the 2018/19 financial year.

The A321LR touches down at New York’s John F Kennedy International Airport after a non-stop transatlantic crossing from Paris in February. (Airbus)

Airbus looking at “surge” A320 production rate of 63 aircraft a month

Currently, Airbus’s four final assembly lines in Hamburg in Germany, Mobile in the United States, Tianjin in China and Toulouse in France produce about 50 A320 family aircraft (both the current and neo variants) a month.
Airbus has previously announced plans to lift the A320 family production rate to 60 deliveries a month by mid-2019.
Wilhelm said Airbus had also secured commitments from its supply chain to achieve a “surge” production rate of 63 A320 family aircraft a month by mid-2019.
“If everything is coming together as planned, obviously there is a potential for some remaining of 2019 and for 2020 to have instead of 60, 63,” Wilhelm said.
“Having a surge capacity in between is also the right thing to have.”
And Airbus was also conducting a feasibility study around lifting the production rate of its A320neo program to 70 or 70-plus aircraft a month.
“The backlog and the commercial momentum underpin the ramp-up plans, I mean the current ones, and gives us a platform for further grown on the A320neo to even higher rates,” Wilhelm said.
“That means 800 aircraft and it is on that basis we confirm the guidance here today.”

A330 production to be cut in 2019

Airbus said it would reduce the production of its A330 program to about 50 deliveries a year in 2019 “based on the current program assessment”. The company delivered 67 A330 aircraft in calendar 2017 and planned to deliver 60 of the type in 2018.
Despite the planned reduction, Wilhelm said the there were good prospects for both the A330 and the A350, noting the “replacement cycle of widebodies has not yet begun”.
“When it does we are very confident that the 330 is going to have a very substantial share of that,” Wilhelm said.
“There is no point in keeping the rate going at too high levels and with too many bookings open and then go over a cliff. That’s why this is a practice since quite some years, we adjust when we think we have to adjust but that should not be necessarily representative of the future.”

VIDEO: An Airbus A330-900 being painted in launch customer TAP Portugal livery, as shown on Airbus’s YouTube channel.
Airbus said its A350 program continued to “make good progress on the ramp-up to the targeted monthly rate of 10 aircraft by year-end”.
Airbus said net profit for the three months to March 31 2018 came in at €283 billion, down 31 per cent from €409 million in the prior corresponding period.
Meanwhile, adjusted earnings before interest and tax (EBIT), which was regarded as the best indication of financial performance, came in at €14 million, compared with negative adjusted EBIT of €19 million in the prior year.
(Airbus noted its 2017 figures have been restated to reflect the adoption of new accounting standards and new segment reporting as of January 1 2018 following a restructure of the company’s business units.)
Revenue was down 12 per cent at €10.1 billion, Airbus said, due in part to lower aircraft deliveries in the quarter.
Airbus said its Commercial Aircraft division posted an adjusted EBIT loss of €41 million, compared with an adjusted EBIT loss of €103 million in the prior corresponding quarter.
Airbus’s Helicopters had an adjusted EBIT loss of EUR3 million, half that of the adjusted EBIT loss of €6 million a year ago.
Airbus Defence and Space adjusted EBIT was five per cent lower at €112 million.
Wilhelm said the regulatory process for Airbus’s proposed investment in Bombardier’s C Series was advancing very well, which could allow the transaction to close “much faster than what we assumed”.
“We could potentially accelerate the closing towards mid-year,” Wilhelm said. “Detailed timing TBD.”
“We have teams that work on Bombardier side, on our side, to prepare for the Day One and the time after closing.
“We cannot, before formally closing, obviously engage in any commercial actions or we cannot engage really on supply chain but we are ready the day we close to hit the market in this segment with the C Series with a combined sales force.”