First it was Qatar.  Now its IndiGo.  Airbus has been doing a great job moving its neo program along.  The program’s sales are substantially ahead of the competing 737 MAX.  Everything looked so good until mid-December.

IndiGo’s reaction to the delay is not exactly positive.  And they have 250 on order, so this is not a customer anyone would like to annoy.

Moreover its not just the neo that is now running late.  The A350 program is also behind scheduled deliveries.  That program has seen slow deliveries this year – hopes are much higher for 2016.

Airbus’ CEO pointed to a “cabin equipment supplier” issue on the A350.  They have not yet pointed any fingers for the neo program (“industrial reasons”).  And there’s little point in doing so.

Airbus has aggressively grown its market share in orders by effectively marketing the neo.  It also missed a market beat by having to redesign the A350 and come up with a solution to fend off the 787 and the 777.   The fact that Airbus also offers the A330neo now is testimony to how hard that is to accomplish.

Production is the other shoe to sales and marketing.  The Airbus sales and marketing team are as effective as any the industry has seen.  Led by a man, who at many speeches we have heard him give, talks about increasing production rates.  He has to request this because his team is selling up a storm – especially A320neos.

The Bottom Line

Aircraft supply chains are long and complex.  The latest generation of aircraft come with all kinds of new technologies – materials and engines.  Fancy new lightweight seats.  Much more complex engines.  And the way these parts come together at OEM’s is a very carefully calibrated orchestra.  One missed beat and you have a problem.

Airbus has pushed its supply chain hard for the A320neo and A350.  It has to because its sales and marketing team are relentless.  Their war with with Boeing is nonstop even as they tramp on Bombardier and Embraer at any opportunity.  Not only does each supplier have to be on-time, it also has to deliver a step change performance improvements.  It is a great gig, but the pressure for performance is relentless.  But any missed note can play havoc with the entire orchestra.

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