Feb 16, 2023
Airbus Delays Output Goal for Bestselling Jet on Supply Woes
(Bloomberg) -- Airbus SE projected higher deliveries for this year and will accelerate output of its largest models as long-haul travel rebounds, while scaling back production of its bestselling A320 family with supply-chain disruptions continuing to ripple through the industry.
For 2023, the planemaker plans to hand over 720 aircraft, in line with its original 2022 projection, which ended up coming in short, at 661 planes. For the monthly output of its A320-family model, Airbus wants to build 65 units by the end of 2024 compared with about 50 this year, and go to 75 in 2026. Both goals are a year later than Airbus’s previous projections.
“This is a very disruptive environment, coming from different sources, that’s making us inefficient,” Airbus Chief Executive Officer Guillaume Faury said on a call with analysts to discuss full-year earnings. “When will we be back to 2018 levels of productivity, I don’t know.”
Airbus is moving ahead more carefully on narrow-bodies after the company missed an already-reduced delivery target last year. For 2023, the planemaker plans to hand over 720 aircraft, in line with its original 2022 projection, which ended up coming in at 661 planes. Faury has cautioned that supply constraints will continue to plague the industry at least for the rest of this year, and he called the delivery shortfall last year “quite frustrating.”
The stock gained as much as 3.4% to €123.14 on Thursday. The shares have gained about 10% this year.
The planemaker expects adjusted earnings before interest and tax of €6 billion ($6.4 billion) this year, compared with €5.6 billion in 2022. Free cash flow before some items will drop to €3 billion, Airbus predicted, from €4.7 billion. Analysts surveyed by Bloomberg estimated adjusted operating profit of €5.4 billion for last year.
Last year’s cash-flow haul was helped in part by favorable exchange rates, Airbus said.
The company, which named Thomas Toepfer as new chief financial officer yesterday, proposed paying a dividend of €1.80 for 2022. It also booked a charge of €477 million related to its A400M military transport aircraft, a program that’s struggled to achieve its commercial and technical targets for years.
Toepfer joins from German specialty-chemicals company Covestro later this year and will succeed Dominik Asam, who has announced his switch to German software company SAP SE after four years at the company.
Analysts at Jefferies called the planned production ramp-up of widebody aircraft “a positive surprise,” while the target for free cash flow for the year is “poor.”
Airbus got off to a slow start this year, handing over just 20 commercial aircraft in January, among the lowest monthly figures in a decade. Boeing Co. managed to deliver almost twice as many, raising pressure on its European rival to get its production act together.
Demand for air travel has soared as countries ease pandemic-era restrictions, prompting airlines to order planes in order to grow their networks and replace older jets with more fuel-efficient models. Just this week, Airbus secured a record 250-plane order from Air India that included 40 of its largest A350 widebody jets.
The planemaker is increasing production of its bigger widebody jets. Output of the A350, its most advanced aircraft, will go to 9 a month by 2025 from 6 currently, while the A330neo will go up by one unit a month to 4 by 2024.
The A320 is by far Airbus’s most important product, competing with Boeing’s 737 model as the industry’s workhorse plane used on shorter routes. The aircraft, which accounts for the majority of Airbus’s order backlog of more than 7,000 aircraft, comes in different sizes, with the majority of customers now opting for the larger A321 variant that can seat more than 200 people in some configurations.
Last year, Airbus delivered 516 A320 family aircraft, alongside 53 smaller A220s, while the rest were for widebody jets. Given the huge order backlog, Airbus now has available slots for its A320 model in 2029, Faury said.
(Updates with output target for this year)
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