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Airbus to boost production

October 26, 2016

The European aerospace group has reported a sharp fall in quarterly earnings on the back of problems in its supply chain which led to fewer-than-expected deliveries. A boost to production is needed to meet 2016 targets.

Airbus China Tianjin Airbus Werk
Image: picture-alliance/dpa

The planemaker's closely-watched earnings before interest and exceptionals (Ebita) sagged 21 percent to 731 million euros ($796 million) in the third quarter, weighed down by persistent challenges in the production of the A350 long-range passenger jet. Overall sales declined one percent in the period to 14 billion euros.

Airbus has already booked a 385-million-euro charge against the A350 program, and needs to supply 24 jets to customers in the final three months of 2016 to make good on its full-year delivery goal of 50 aircraft

Problems with suppliers had held back A350 deliveries, Airbus said on Wednesday, while "good progress" was made over the summer to bring down the level of outstanding work in the final assembly line of the A350.

The group has also been struggling to catch up on deliveries of its A320 Neo short-haul jet after they were held up by cooling and starting problems in its new Pratt & Whitney geared turbofan engine.

"Early teething problems with the Pratt & Whitney (P&W) engine are now largely over," said Airbus, but added that P&W was facing some industrial ramp-up challenges which puts more pressure on "the backloading of the delivery profile."

Tom Enders, Airbus chief executive, said: "For the remaining months of the year we remain totally focused on deliveries to achieve our earnings and cash guidance."

Airbus' new models failing to take off

Ramping up production

The supplier problems this year come as Airbus is in the middle of a widespread restructuring, attempting to merge its commercial jet arm with the parent group.

The integration of Airbus's passenger jet business within the group will mean job losses, as duplication of roles is eliminated. The company gave no details on job losses on Wednesday.

The group did, however, reaffirm its 2016 performance targets, including stable operating earnings and free cash flow compared to 2015. This should be reached with a boost to production, Airbus said, as it would aim to raise deliveries to 670 planes this year - 20 more than scheduled.

However, in the first nine months of the year group deliveries were behind schedule with 462 planes. Financial director Harald Wilhelm conceded that "there remains much still to do" and that Airbus was counting on suppliers to help them hit the revised total.

uhe/jd (Reuters, dpa, AFP)