Airbus Under Pressure To Meet 2016 Delivery Goals

 - October 26, 2016, 2:49 PM
Airbus Group CFO Harald Wilhelm (Photo: Airbus Group)

Airbus sees the prospect of delivering 50 A350s by the end of the year as increasingly feasible, notwithstanding what CFO Harald Wilhelm characterized as insufficient progress among some suppliers in resolving the continuing problem of so-called traveled work. To meet its A350 delivery goal for the year Airbus would have to ship 24 airplanes—nearly as many as it has delivered since Qatar Airways took the first production example in December 2014.

Speaking Wednesday during the company's third-quarter earnings presentation, Wilhelm appeared encouraged by the progress Airbus made on the A350 during what normally proves a slow late summer/early fall period, when engineers managed to prepare the program for a “backloaded” fourth quarter in which the company plans to accelerate deliveries markedly.

In all, Airbus plans to deliver 670 airplanes by the end of the year, including more than 200 aircraft in the fourth quarter alone, in an effort to match its 2015 year-end earnings performance of €4.1 billion. It expects the resulting improvement to offset a difficult third quarter in which it saw a 21 percent decline in adjusted earnings before interestand taxes (EBIT), from €921 million to €731 million.

However, after delivering 14 A350s in the third quarter, Airbus continues to encounter what Wilhelm called a difficult supply chain challenge. “The supply chain remains a concern,” he conceded. “We have to muddle through that in 2016. I have to say...this is not the time to celebrate success. They need to be totally focused, and they’re not yet there where they need to be for the ramp-up in 2017. But 2016 we know how to handle.”

Further challenges involve the A320neo, more than 20 of which awaited installation of their Pratt & Whitney PW1100G engines at the end of the third quarter, said Wilhelm. Although Pratt & Whitney has found a solution to the “rotor bow” problems that led to longer than acceptable restart times, PW1100G deliveries remain behind schedule, leaving Airbus with a disproportionate delivery undertaking for the fourth quarter and the prospect of further backloading next year.

“I can not exclude again some backloading for 2017,” said Wilhelm. “Certainly our intention would be make it less loaded than it is this year... But I think it is a bit early to talk about the phasing in 2017 as we are in discussions to register [a] firm commitment [from Pratt & Whitney].”