JetBlue’s ‘Very Disappointed’ CFO Jabs Airbus on A321 Delays

(Bloomberg) -- JetBlue Airways Corp. expressed dismay with Airbus SE after the U.S. carrier learned it will get less than half the A321neo jets it was expecting this year because of production snarls that are delaying deliveries of the European planemaker’s biggest single-aisle model.

The New York-based airline will get a maximum of six of the aircraft this year, compared with the 13 that were originally planned, Chief Financial Officer Steve Priest said Tuesday. Next year, JetBlue will receive 14 of the jets, or one less than previously scheduled.

“We’re very disappointed with the continued delays to our A321neo program as a result of Airbus production issues, including a further delay we received in the last week and a half,” Priest said on a call with analysts.

The delays have forced JetBlue to adjust flight schedules in the second half of this year and trim next year’s growth plans, adding to the pressure on the airline as it nears the end of a three-year effort to control nonfuel spending. JetBlue’s reproach echoed criticism earlier this month by British Airways owner IAG SA, which said that frustration with Airbus contributed to its decision to reach a 200-jet deal for Boeing Co.’s beleaguered 737 Max.

JetBlue climbed 1.6% to $19.27 at 2:49 p.m. in New York. Airbus advanced 1.4% to 132.62 euros at the close in Paris.

Earnings Impact

JetBlue is working closely with Airbus “to uphold our original capacity plans as much as possible,” said Chief Executive Officer Robin Hayes.

The company is cutting next year’s planned expansion in seating capacity by 2 percentage points, Priest said, without quantifying the growth forecast. He said the delivery woes would have a “fairly limited” effect on per-share earnings.

The airline’s first A321neo was delivered in June, four months late, and will begin flights this fall. The carrier is scheduled to take 84 A321neo planes through 2026. The delays won’t affect JetBlue’s plans to use an extended-range version of the aircraft to connect London with New York and Boston starting in 2021.

JetBlue’s planned 3% to 5% growth this quarter is “unusually low,” in part due to “tactical cuts” made to mitigate the A321neo delays, President Joanna Geraghty said. The airline is maintaining its existing forecast that 2020 unit costs, a gauge of efficiency, will decline as much as 2.5% next year.

Airbus has been struggling to push out enough of its A321s to customers after offering its so-called Cabin Flex option, allowing for more customization in the aircraft’s interiors, including variations on the layout and positioning of emergency exits. The aircraft has proven popular, with the longest-range variant gaining traction as an alternative to flying bigger wide-body jetliners on long-distance routes.

Production Slowdown

The manufacturer said in May that it was slowing A321 production to a rate of one in as many as four days compared with just two days to build the original A320neo model. Airbus said at the time that it would engage with customers on rescheduling those deliveries.

A spokesman for the Toulouse, France-based company acknowledged that “challenges remain” with production, adding that deliveries will increase in the second half.

The delays have also drawn ire from IAG Chief Executive Officer Willie Walsh. He said that his recent decision to buy Boeing’s 737 Max -- which has been grounded since March after two deadly crashes -- was partly due to the production problems at Airbus.

IAG’s narrow-body Airbus planes have arrived 70 days late on average, Walsh said.

To contact the reporters on this story: Mary Schlangenstein in Dallas at maryc.s@bloomberg.net;Benjamin Katz in London at bkatz38@bloomberg.net

To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Tony Robinson

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