Airbus’ Tough Climb to Rate 75

The 820 delivery target for this year is looking increasingly like a bridge too far. Then, along comes this news, making that target even more implausible. We previously noted that engines are an issue for single-aisle aircraft, and cabin fixtures are an issue for twin-aisles. Our tracker models are the basis of our view. Let's go over some of the data we have. This first table provides context. Airbus has more production and delivery capacity than the other OEMs, and expectations naturally align. [caption id="attachment_123481" align="aligncenter" width="476"] AirInsight[/caption] Single Aisles This segment is the most important because this is where the volume is. Over 70% of that delivery target is in this segment. Deliveries require an aircraft to have everything, and in this segment, the pacing item is engines. Here's our tracking through this morning. Key items: The A220 program is doing better, but nowhere near 14/month. Until this rate is achieved, there won't be a growth model. But an interesting argument could be made that, if such a model were available, rates would exceed 14. The A320 has been eclipsed by the A321 far more quickly than anyone could have imagined. The code to understand the models is this: any x5x is CFM LEAP-powered, and any x7x is P&W GTF-powered. [caption id="attachment_123482" align="aligncenter" width="580"] AirInsight[/caption] Now let's look at engine deliveries. You can see why there has been a decline in chatter about the GTF from Airbus. To airlines' annoyance, P&W has prioritized Airbus. Customers like Wizz are delaying deliveries as it works to resolve its AOG issues. This news is music to United, whose A321s with GTF power will come sooner—even Delta, which is now arguably Airbus' most important US customer, hasn't said a peep about the GTF. It even parked a new A321neo to scavenge its engines. Since Delta has TechOps, it can fix its own engines. Wizz, like several others, doesn't, so it must scramble to find MRO support. [caption id="attachment_123483" align="aligncenter" width="580"] AirInsight[/caption] CFM is trying hard to catch up. But the news isn't great. Even P&W is seeing a rise in delayed deliveries. To our knowledge, no one else has reported on the September jump. [caption id="attachment_123484" align="aligncenter" width="580"] AirInsight[/caption] Here's who's being impacted by delays. There's a China pattern here that Boeing faces as well. Which begs the question: is it only engines? Maybe for one OEM and not the other? Airbus engines come from France and Boeing's from the USA. [caption id="attachment_123485" align="aligncenter" width="580"] AirInsight[/caption] Twin Aisles Here are the same charts for twin aisles. Key items: The A330 program is moving more slowly than expected. The A330ceo models are now aging out and need to be replaced. The A330-900 is a far more capable aircraft and, in our view, is the sleeper among the Airbus twins. The A350-1000 has been a target of sniggers at Boeing. Its slow progress is intriguing. The sooner influential customers like Delta get theirs, the better. The A350-900 is doing well. Airbus' range depends on Rolls-Royce, and that is an Achilles heel. Boeing's twins are exposed to GE, and the risk is plain to see on the 777X. Airbus is not immune to an engine disruption. [caption id="attachment_123486" align="aligncenter" width="580"] AirInsight[/caption] Here are the delivery YTD trends. The rate has been steady, reflecting stability in the FAL. It should be good news. [caption id="attachment_123489" align="aligncenter" width="580"] AirInsight[/caption] Here's where the WIP lies. It used to be that if you saw Qatar Airways, you'd wince. But there's a new sheriff, and relations are calm. Even so, one-third of the WIP is located in one region. [caption id="attachment_123490" align="aligncenter" width="580"] AirInsight[/caption] Summary Where there's smoke, there's fire. Airbus is facing a steep climb to meet its 2025 target. And rate 75? That, too, looks like a steep target. If the pandemic taught us anything, it is that disrupting the supply chain is a danger. Disrupting is easy. Getting it back to stability takes much longer than anyone wants. Intriguingly, this is where Boeing's reacquiring its mojo is very helpful. With the duopoly pushing and pulling the supply chain, the myriad small firms are more likely to take risky investments in tooling and people. However, the impact of this activity takes time to come through. Especially getting the people to the required skill levels to deliver at the rate.

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