Airbus Will Miss Its A320neo Delivery Goal After Engine Problems
Airbus expects to deliver 30 to 40 fewer aircrafts than it previously anticipated this year, sources say
(Bloomberg) -- Airbus SE will miss its delivery target for Pratt & Whitney-powered A320neo narrow-body jets this year, after problems with the engines caused an almost three-month halt in shipments, people familiar with the matter said.
The Toulouse, France-based planemaker expects to deliver 30 to 40 fewer of the aircraft than it previously anticipated, according to one of the people, who asked not to be identified discussing internal plans. Airbus had planned to hand over about 210 of the Pratt-powered jets -- one of two engine options for the A320neo -- during the rest of this year, the person said. It could get closer to that target if Pratt, a unit of United Technologies Corp., can accelerate turbine production beyond current levels.
Airbus shares fell as much as 3.2 percent on Monday, following the Bloomberg report. The company reiterated its overall production target for shipping 800 planes of all models this year, it said in a statement, declining to comment on specifics of the A320 program.
The delays on Airbus’s hottest selling model -- a workhorse for airlines worldwide -- threaten to expose the planemaker and Pratt to late penalties from frustrated customers. The tardiness also will pressure Airbus’s effort to ramp up production generally, reducing room for maneuvering in its schedule. The company had planned to use this year to catch up from other delivery delays from 2017, a goal that is now out of reach.
IndiGo, India’s biggest airline, is the largest customer for the A320neo model with 430 jets on order. The airline has previously said it has been forced to lease A320ceo planes on short-term deals, adding to costs.
Airbus had said in early June that it expected higher costs to manage delivery of scores of aircraft that were parked without engines after the latest issue with a knife-edge seal on the high-tech engine, one of several in a new generation of fuel-saving power plants from manufacturers that have suffered through persistent teething pains.
At the time, commercial-aircraft chief Guillaume Faury called the situation “challenging,” but said that “if the engine manufacturers stick to their plans, we will stick to ours or very close.” Airbus expects to work through almost all of the so-called glider backup by year-end, he said then.
Airplane Deliveries
Airbus traded down 2.7 percent to 97.56 euros at 9:18 a.m. in Paris. The shares are up 17 percent this year, giving the European planemaker, whose biggest owners are the French and German governments, a market value of 75.4 billion euros ($88 billion). IndiGo fell to its lowest since September in Mumbai.
The company is due to publish monthly order and delivery totals for June this week. “At the end of the day or year, what matters is achieving the guidance, to have delivered around 800 aircraft and the corresponding, incoming cash linked to those deliveries,” Airbus said in an email.
The company can still meet its target for deliveries of the A320 family of planes, people familiar with the matter said, by picking up the slack with other engine options, including the A320ceo. That variant is less expensive than the more fuel-efficient neo, which stands for new engine option.
The company plans to ship about 210 more A320neo planes with engines made by CFM International, a joint venture of Safran SA and General Electric Co., one of the people said.
Pratt didn’t respond to requests for comment.
The latest problem in the engine -- a fault in its knife-edge seal that led to in-flight shutdowns -- is just the most recent in a series of afflictions for the turbine. Bloomberg News reported last month that Pratt & Whitney is close to finalizing a redesign of the faulty engine part.
The other choice for the A320neo, CFM’s Leap turbine, has also contributed to the number of aircraft that have been undelivered. As a result, Airbus has been forced to store aircraft in France, China, Germany and the U.S. awaiting engine installation.
To contact the reporters on this story: Anurag Kotoky in New Delhi at akotoky@bloomberg.net;Benjamin Katz in London at bkatz38@bloomberg.net
To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, ;Anand Krishnamoorthy at anandk@bloomberg.net, Brendan Case
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