Airbus plans to cut production of its A330 family from 60 this year to about 50 in 2019 amid weakening demand for the widebody product while the company scrambles to recover from a delivery shortfall involving A320 narrowbodies due to continuing struggles by engine suppliers to meet their own delivery commitments. The announcement of the production slowdown comes as sales of the new A330neo fail to build as quickly as hoped, forcing a moderation in delivery projections. A recent decision by Hawaiian Airlines to drop an order announced in 2014 for six A330-800s in favor of ten 787-9s exacerbated the situation.
Airbus delivered only 121 airplanes in the first quarter out of a projected 800 for the year, leading to a 30 percent drop in profits and a 12 percent decline in revenues for the period. Speaking during the company’s first-quarter earnings call on Friday, Airbus CEO Tom Enders nevertheless expressed confidence that engine suppliers Pratt & Whitney and CFM would resolve their difficulties, allowing Airbus to meet its projections for the full year.
Meanwhile, CFO Harald Wilhelm clarified a statement from an Airbus spokesman this week indicating that the A320 supply chain committed to allowing for an increase in monthly production from 55 to 63 in the second quarter of next year, rather than its previously announced plan for 60. During the call, Wilhelm said Airbus had only asked for so-called surge capacity of 63 a month, and that delivery rates would still equate to the previously agreed commitment of 60.
In fact, Safran CEO Phillipe Petitcolon publicly balked at allusions to a production rate of any more than 60 while deliveries of CFM Leap turbofans continue to run about six weeks late. Safran maintains an equal partnership with GE Aviation in the CFM joint venture that builds one of the engine choices for the A320neo, the Leap-1A, and the CFM56 for the legacy A320ceo.
In the midst of a production transition from the CFM56 to the Leap family of turbofans, CFM has committed to delivering 1,000 of the legacy engines and between 1,100 and 1,200 of the new model this year. However, a delivery delay of between four and five weeks CFM executive v-p and general manager François Bastin reported in January has now turned to six, as the company triples its weekly Leap output from 2017's rate.
Separately, United Technologies CEO Greg Hayes described his company’s response to the narrowbody rate hikes by Airbus and Boeing as a struggle, not so much for UTC’s Pratt & Whitney subsidiary but for Pratt’s own suppliers. “It is something we are struggling with today,” he told analysts during UTC’s earnings call on Tuesday. “At Pratt & Whitney we are at rate 55 with [geared turbofan] engines...and we have committed to take the rate up over the next couple of years. But for second- and third-tier suppliers, I question if the sub-tiers really have enough capacity. If we are going to see big jumps [in A320neo and 737 production rates], it will be a problem, so you will see big bottlenecks.”