Airbus to make original A320 jets amid Neo wait

Paris / Bloomberg

Airbus Group SE will continue building the older variant of its single-aisle A320 aircraft until at least 2019, two years later than intended, as glitches with the re-engined Neo version curb handovers of the new plane.
Customers due to take the New Engine Option jets next year will be invited to swap to the less expensive original model, Fabrice Bregier, chief executive officer of Airbus’s jetliner unit, said at a briefing. It’s too late to make the same offer for Neos scheduled for shipping this year, he said.
Airbus still aims to deliver about 10 A320Neos to Qatar Airways Ltd. in 2016 once cooling issues with their Pratt & Whitney engines are fixed, Bregier said in Dublin, where he was attending the International Air Transport Association’s annual gathering. The Persian Gulf carrier has declined to take the afflicted jets.
The offer of original-version A320s will also be made to customers due to take planes powered by engines from CFM International, which are due to enter service in July or August and haven’t suffered any known issues.
About 20 percent of the A320s delivered in 2016 — roughly 100 — were originally due to be Neos.
Airbus fell as much as 4.3 percent and was trading down 3.3 percent at 53.46 euros as of 5 p.m. in Paris. The stock reached its intraday low as the euro started to climb against the dollar following a weak US labour-market report, which may prompt the Federal Reserve to put off an increase in interest rates. Shares of the Airbus continue to decline on the fourth consecutive day, with the drop sharpening Thursday after German Defense Minister Ursula von der Leyen said the government will seek reimbursement for delays to Airbus’s A400M military transport plane.
“The shares are getting hit from the rising euro, as every euro-cent appreciation against the dollar costs the company about 100 million euros ($113 million) in operating profit over time through the hedge rate,” said Norbert Kretlow, an analyst at Commerzbank AG in Frankfurt. In addition, the A320neo is more profitable than the current A320 version, “so for every aircraft they sell with existing engines, they lose some 2 or 3 million euros. The reports about compensation claims from the German government for the A400m also don’t help.”
Airbus reiterated this week that it plans to hand over 650 jets from across its lineup this year, versus 635 in 2015, once the A320Neo snags and delays to A350 wide-bodies are resolved. In the four months through April, it had shipped 177 planes, 37 short of the expected pace.