Supply chain challenges force Airbus to delay its ramp-up plans for the A320neo family by some six months. Instead of increasing the rate to 65 aircraft per month from the summer of 2023, the airframer will now take this step in early 2024, it said on July 27 in its HY1 results presentation. Supply chain issues will also impact total deliveries this year, which have been reduced from to the previously projected 720 to 700. Supply chain issues force Airbus to delay higher A320neo rate to early 2024.
Like Boeing, Airbus has been suffering from supply chain issues for most of the year as well. Some are with raw materials, but the major problem is with the engine suppliers CFM and Pratt & Whitney that directly impact A320neo and A321neo production. Last year, Airbus planned to increase the rate to 43 to 45 per month, with rate 65 to be introduced by mid-2023 and rate 70-74 in 2025. However, it has struggled the meet these numbers. At the end of June, there were 26 so-called ‘gliders’ (aircraft without engines, see the main picture with the A321XLR at the front) which it hopes to have solved by the end of the year.
Faury said there hasn’t been a specific reason to change the plans, but it follows after an assessment of the near-term situation and risks and opportunities in the past weeks. “We have been late on the trajectory that we had given to ourselves for the prior quarters and the situation of the supply chain is what it is today. So we have been trying to assess the most likely trajectory moving forward. This is leading to a rate of 65 slower than what we had planned so far. That reflects that it takes more time than what we had expected to move up”, Faury replied to a question from AirInsight. “The fact that we have ‘gliders’ shows what the production of Airbus is capable of, but we need the parts and equipment. That’s the bottleneck.” In April, lessor BOC Aviation and others already questioned the feasibility of the aggressive ramp-up plans that both Airbus and Boeing had in mind.
To stabilize production, the rate will now progress slower, with the intention to step up to 65 A320neo family aircraft in early 2024. Airbus has a ‘firm target’ to ramp up to 75 aircraft in 2025, backed by strong market demand and a strong backlog. The airframer continues to be ‘engaged’ about this rate with suppliers. Production of the A220 is on track for the rate increase to fourteen per month in 2025.
Rates of the A350 could go up to five per month if Airbus gets support from suppliers. (Richard Schuurman)
Airbus is also looking at rate increases for its widebody programs, exploring options with suppliers to get the A330 to three aircraft per month in late 2022 and the A350 to five per month from early 2023. Faury stressed that no final decision has been made and it depends on whether suppliers are able to produce items with long lead times for the ramp-up.
The European airframer delivered 297 aircraft in the first six months, identical to the number in HY1 2021. Of these, 230 were A320neo family (three A3210neo’s, 108 A320neo’s, and 119 A321neo’s), 29 A350s, 25 A220s, and thirteen A330s. It took 442 gross orders or 259 net orders including cancelations. The total backlog is 7.046 aircraft compared to 6.925 at the end of June last year.
Net profit of 1.9 billion
Airbus Group ended HY1 with a €1.901 billion net profit compared to €2.231 billion in the same period last year. EBIT Adjusted was €2.645 billion versus €2.703 billion, EBIT Reported €2.579 billion versus €2.727 billion. Total revenues were €24.810 billion compared to €24.637 billion last year. Free cash flow before mergers and acquisitions and customer financing was €19.055 billion versus €2.051 billion in 2021. Airbus ended June with €7.214 billion in net cash, down from €7.740 billion in December.
Commercial Aircraft reported €17.533 billion in revenues (2021: €17.813 billion), an EBIT Adjusted of €2.276 billion (€2.291 billion), and an EBIT Reported of €2.478 billion (€2.387 billion). Despite lowering the total number of deliveries by some twenty aircraft, Airbus maintains its outlook of an EBIT Adjusted of around €5.5 billion and free cash flow before M&A and customer financing of around €3.5 billion. The reason for that is that strong pre-delivery payments will come in until the end of the year, said Chief Financial Officer Dominik Asam.
Asked about the situation of the A321XLR and the discussions with EASA about their concerns over the rear center tank, Faury said that “we have made a lot of progress to meet the requirements and moving forward. I am very satisfied, but I will only be pleased when we are at the end of the demonstration phase and get certification.” Chief Commercial Officer Christian Scherer said in an interview with AeroTelegraph in Farnborough last week that modifications will be made to the tank to improve its safety, which wouldn’t or only marginally affect the 8.700 kilometers range of the XLR. In May, Airbus delayed entry into service of the XLR from late 2023 to early 2024.
Active as a journalist since 1987, with a background in newspapers, magazines, and a regional news station, Richard has been covering commercial aviation on a freelance basis since late 2016.
In 2022, he has gone full-time freelance. Richard has been contributing to AirInsight since December 2018. He is also writing for Airliner World and Aviation News. From January 2023, he will add a part-time role with Dutch website and magazine Luchtvaartnieuws. Twitter: @rschuur_aero.