Airbus Faces Delivery Challenges Affecting Annual Goals
Airbus Delivery Challenges Pose Risks to Annual Targets
Amid increasing uncertainty, Airbus is experiencing a slowdown in aircraft deliveries as September draws to a close. This trend has prompted industry analysts and insiders to question the company's ability to meet its adjusted annual delivery target. With deliveries lagging compared to the previous year, the outlook for Airbus looks challenging.
Revised Annual Target and Profit Warning
Earlier this year, Airbus issued a profit warning that acknowledged the impact of engine shortages and other supply chain issues. The company adjusted its full-year delivery target down from 800 aircraft to 770, reflecting a cautious stance on production capabilities. Additionally, it postponed its underlying production goal, now aiming for the year 2027 instead of the previously set timeline.
Concerns Over Current Delivery Rates
As of now, Airbus has only delivered around 30 aircraft in September, bringing this year's total to about 477. If the current pace continues, the monthly tally may reach approximately 36 deliveries, resulting in a total of 483 deliveries by the end of September. This figure would fall short of the 488 deliveries recorded by this time last year.
Internal Pressure and Company Sentiment
Sources within Airbus indicate a growing sense of urgency regarding aircraft production, particularly in the narrowbody jet segment. Chief Executive Guillaume Faury has expressed frustration over stagnant production levels, and there is a palpable impatience among employees. Analysts note that Airbus has managed to keep production figures close to previous years, yet concerns remain high about whether the company can hit the revised delivery goal of 770 aircraft.
The Role of Analysts in Forecasting Delivery Outcomes
According to Rob Morris, head of global consultancy Cirium Ascend, Airbus has been tracking closely to its 2023 cumulative numbers. This alignment only reinforces worries that the company may not achieve the revised target of 770 deliveries. An Airbus spokesperson has referred back to the company's latest guidance, indicating that they remain committed to that target. This effort is supported by an acknowledgment of the unpredictable nature of fourth-quarter outputs.
Supply Chain Pressures Impacting Production
Despite the historical trend of surprises during the fourth quarter, Airbus faces mounting pressures due to ongoing supply chain issues and internal production challenges. Agency Partners analyst Sash Tusa emphasized the growing risks associated with deliveries, suggesting that the company is more likely to struggle than to exceed its targets. Concerns extend beyond the current year, with questions about the ramp-up of production levels beyond 2024.
Production Plans and Financial Strategies
Airbus is maintaining an average production of around 50 A320neo jets per month, a figure that has seen little change over the past year. There is increasing pressure to meet a medium-term target of 75 jets monthly, as any failure could further hinder the company's financial flexibility. A memo from CEO Christian Scherer highlighted the company's efforts to control costs through a strategic performance improvement plan known as LEAD! This initiative aims to address rising unit costs and ensure that the company achieves its delivery goals for 2024.
FAQs
What challenges is Airbus currently facing with deliveries?
Airbus is facing challenges such as engine shortages and supply chain disruptions, leading to a slowdown in aircraft deliveries.
What is Airbus's adjusted annual delivery target?
Airbus has lowered its annual delivery target from 800 aircraft to 770, reflecting the current production challenges.
How many aircraft has Airbus delivered this year?
As of now, Airbus has delivered approximately 477 aircraft this year, with September's deliveries significantly impacting the totals.
What is the significance of the LEAD! performance improvement plan?
The LEAD! plan is designed to control rising unit costs and improve production efficiency, focusing on ensuring successful deliveries in 2024.
What are the concerns analysts have about Airbus’s future production?
Analysts are concerned that Airbus may not meet its revised delivery targets due to current production rates and supply chain pressures, impacting future growth.
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