Airbus Feeling Heat From Engine Woes as Deliveries Tumble
(Bloomberg) -- Airbus SE’s revenue slumped and the company handed over the fewest planes in a quarter since 2011 as delays at engine providers held up deliveries of its narrow-body A320 planes.
The manufacturing giant shipped 121 jets in the first three months, the least since the third quarter of 2011, based on a statement Friday. It stuck with plans to deliver 800 aircraft this year, while saying that will require an improved performance from engine providers.
“It’s a challenging situation for all, but based on the confidence expressed by the engine makers and their ability to deliver on commitments, we can confirm our full-year outlook,” Chief Executive Officer Tom Enders said in the release.
Airbus’s sales fell 11 percent to 10.1 billion euros ($12 billion), dragged down by lower plane and helicopter handovers, while cash flow was minus 3.8 billion euros. That reflects a build up of inventory following the narrow-body logjam, according to Sandy Morris, an analyst at Jefferies International in London who labeled the quarterly figures “grisly.”
Enders has said that dozens of A320neo aircraft are sitting at Airbus’s headquarters in Toulouse, France, and at a plant in Hamburg, Germany, awaiting engines from Pratt & Whitney and CFM International.
The suppliers have suffered glitches and quality-control issues after designing improved turbines to deliver the re-engined model’s promised fuel-burn gains. Deliveries from Pratt have resumed after the latest delay, Airbus said, adding that it’s talking with component makers about lifting narrow-body build rates beyond current planned levels.
The company posted adjusted earnings before interest and tax of 14 million euros, better than predicted by analysts, as handovers of the A350 wide-body plane surpassed last year’s level and the model’s unit costs eased as production accelerated. Morris said it’s “fortunate” that the A350 showed such an improvement given the other challenges.
Airbus shares traded 0.25 percent higher at 95.74 euros as of 9:07 a.m. in Paris. The stock has gained 15 percent this year, valuing the group at 74 billion euros.
The planemaker announced plans to slow deliveries of the A330 wide-body to 50 jets a year from 2019, versus 67 in 2017. A re-engined Neo version of the model is due for first delivery this year but has seen sluggish sales, and Chief Financial Officer Harald Wilhelm said on a call that Airbus does not want to build “any unallocated aircraft.”
The company said it’s working to finalize an amended contract for the A400M military transport, a program beset by delays and cost-overruns for years, after government customers agreed to a revised delivery plan requiring production of just eight aircraft a year from 2020.
Analysts had forecast an adjusted Ebit loss of 15.7 million euros, based on six estimates. The company had a year-earlier loss of 19 million euros, restated for accounting changes.
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