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Reuters reports that Airbus faces delivery challenges because of Spirit Aero’s supplies. The report notes that Airbus has its people on-site at Spirit Aero’s North Carolina facility. The media was briefed on this the night before the Farnborough show.  The media was also told that Airbus did not appreciate the supply chain’s second-guessing its production rates.
Airbus and Boeing know the rate plans shared with vendors are less sure they like; they are guesses based on what they think will happen. Looking back over the period since the pandemic, any supply chain vendor will spend resources developing their views on probable or possible.
The terms of vendor contracts make de-risking essential. Vendors are at risk when rates are changed to eat the cost of work in progress (when rates are slowed) or find capital to increase production. We wrote about this in April. In 2023, we noted Airbus’s change in its quarterly production rate announcement policy. Supply chain challenges date back even before that.
A220 and A350 Programs
Let’s look at the A220 and A350 programs. Spirit Aero is a vendor to both. Reading the Reuters story you will note the vendor denies any problems. “We are delivering Airbus product based on our customer’s schedule,” spokesperson Joe Buccino said.
The chart shows program deliveries, and none happens unless all the parts have been assembled. 2020 was the pandemic year, and A350 deliveries dropped off as long-haul flying stopped. However, the A220 program remained busy as this size airplane was what the market could use.
The 2024 numbers are through September, hence the decline.
Spirit Aero may not be the primary cause of supply chain issues; perhaps it is at the locus where several parts come together. This quote from Reuters seems on target to support this view: “Our greatest concern here is that what Airbus needs to do is not just fix one supplier situation, but multiple ones,” Bernstein analysts said.
The supply chain is wobbly for several well-covered and reported reasons. Spirit Aero is an easy target, and in fairness, what we see happening across the industry.
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