Airbus SE dropped an intermediate target of building 65 of its bestselling A320 model a month by the end of next year, suggesting the European aircraft maker may want more flexibility on output as supply-chain issues continue to bite.
(Bloomberg) — Airbus SE dropped an intermediate target of building 65 of its bestselling A320 model a month by the end of next year, suggesting the European aircraft maker may want more flexibility on output as supply-chain issues continue to bite.
While Airbus said it’s on track to meet a plan to build 75 A320 jets a month by 2026, it no longer mentioned the 65 target that had previously been a step toward the final goal. Instead, Airbus said it will make what it called “tactical adjustments to production planning” to meet its output rate, which now stands at about 50 units a month on the A320.
The simplified outlook comes a day after RTX Corp., a key engine supplier to Airbus, said that it will need to remove 1,200 engines from Airbus planes in the coming year for inspection after finding a possible fault. That disruption adds to a supply chain that has remained strained ever since the coronavirus pandemic. Chief Executive Officer Guillaume Faury said in the statement on Wednesday that the operational environment remains “complex.”
Airbus provided the outlook as it reported earnings for the first half that beat estimates. Adjusted earnings before interest and taxes rose to €2.6 billion, compared with €2.5 billion estimate by analysts. Revenue rose 12% to €27.7 billion.
The European planemaker reiterated its delivery target of 720 planes this year, alongside its forecast for adjusted earnings before interest and tax of €6 billion for 2023. It expects free cash flow before some items to drop to €3 billion from €4.7 billion.
The planemaker is working to avoid a repeat of last year’s performance, when it was forced to twice slash its annual delivery target with suppliers contending with the residual impact of the global health crisis still short of workers and unable meet demand for components ranging from seats to semiconductors to raw materials.
Earlier on Wednesday, Boeing Co. reported earnings that beat estimates, sending its stock up as much as 6.3%. Like Airbus, Boeing has benefitted from large-scale orders for aircraft this year, including a haul at the Paris Air Show last month that bolstered free cash flow.
Boeing CEO Dave Calhoun also called the operating environment for the planemaker “complex.”
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