Airbus cuts its delivery target, slows ramp up on supply woes

Bloomberg

Airbus SE cut its delivery goal and slowed a ramp up in production of its best-selling narrow-body model as supply-chain issues afflicting everything from engines to microchips show no sign of easing.
The world’s biggest planemaker now aims to hand over around 700 aircraft in 2022, compared with an earlier target of 720, it said in a statement. A build rate of 65 a month for the A320 single-aisle family previously targeted for next summer won’t now be achieved until early 2024.
“We’ve come to the conclusion that the supply chain was not going to be able to support the previous plan,” Chief Executive Officer Guillaume Faury said. “It would have been difficult to catch up in the second half.”
Airbus declined as much as 4% to 102 euros, bringing the drop this year to about 9%.
The revisions shouldn’t hit Airbus’s financial performance in the short term, with the company reiterating full-year estimates for earnings and cash, but indicate significant challenges in boosting output in an economic environment beset by labour and materials shortages. A slower increase in A320 production also means a five-year order backlog may take longer to clear, impacting existing clients and potentially hurting the firm’s ability to win new business.
Airbus posted adjusted earnings before interest and tax of 2.64 billion euros ($2.7 billion) for the first half, 2% lower than a year earlier. Analysts had forecast a profit of 2.55 billion euros, based on data compiled by Bloomberg.
The figure should reach 5.5 billion euros for the whole of 2022, up from 4.9 billion euros in 2021. Free cash flow is expected to amount to 3.5 billion euros before customer financing and acquisitions, about equal to last year. Airbus is “losing a bit of momentum as macro conditions get tougher,” said Agency Partners analyst Sash Tusa. He sees the ramp up to rate 75 on the A320 family slipping to mid-2026.
The planemaker said it still plans to build 75 A320s a month in 2025 and is evaluating the possibility of increasing build rates for wide-body aircraft, a segment that’s been slow to recover from the coronavirus crisis but is now attracting increasing order interest, according to Faury.
Airbus has close to 100 undelivered aircraft in total lacking a variety of components, after failing to reduce the number down since last year.