Summary
- Airbus reveals profit forecast downgrade, with its shares dropping soon after.
- Challenges persist with limited availability of parts impacting delivery targets.
- Despite setbacks, Airbus remains ahead of Boeing in narrowbody aircraft production.
Airbus has revealed a reduction in its profit forecast, which has sent its shares plummeting. The European airplane maker continues to face issues related to its supply chain, and a shortage of parts has affected the production of the bestselling A320 family of aircraft.
Shares fall after profit forecast
On June 24, Airbus gave a market update to report on new developments related to its space activities and commercial aircraft business. The plane maker has faced an impact by the limited availability of parts for its aircraft, which has affected the production of its A320 family of planes.
Photo: Airbus
Airbus now estimates that its underlying operating income will be €5.5bn this year, less than the previous forecast of between €6.5bn and €7bn. Naturally, this affected the value of its shares, which plummeted by almost 10% on Tuesday.
For its space activities, Airbus conducted an extensive technical review of all programs and identified some more commercial and technical challenges. As a result, the organization took charges of around €900 million in the H1 2024 accounts.
Related
Airbus Cuts A320 Delivery Targets Amid Supply Chain Issues
Airbus’ previous guidance of 800 aircraft deliveries in 2024 was reiterated twice, during its 2023 and Q1 2024 financial results presentations.
Shortage of parts
The company said that it is facing “persistent” and “specific” supply-chain issues that have affected its engines, aerostructures, and cabin equipment. Airbus chief executive, Guillaume Faury, said,
“We are facing headwinds right now; we have to bite the bullet.”
The plane manufacturer said that it expects to push out 770 aircraft this year from its factory, down from its earlier forecast of 800, but still higher than 735 jets delivered in 2023.
Photo: Airbus
More importantly, Airbus has now pushed the delivery target of 75 A320neo planes a month to 2027, based on the earlier forecast for 2026. Still, it estimates that its updated 2024 guidance will not significantly impact air traffic, among other things. In a statement, it said,
“As the basis for its updated 2024 guidance, the Company assumes no additional disruptions to the world economy, air traffic, the supply chain, the Company’s internal operations, and its ability to deliver products and services.”
Apart from its target of 770 aircraft deliveries this year, Airbus’ new 2024 targets also include an EBIT adjusted of around € 5.5 billion and free cash flow before customer financing of around € 3.5 billion.
Still ahead of Boeing
Airbus currently produces around 50 A320 family of jets a month. And while there’s still some time before it touches the 75-a-month mark, its current output is still better than its American rival Boeing, which is struggling to meet even 38 B737 MAX jets, which is a limit that the FAA has enforced because of its quality issues.
Photo: Airbus
Airbus’ engine supply issues are also, in part, because of engine maker CFM’s commitment to Boeing, according to industry sources as reported by Reuters. The company is a joint venture between US’ GE Aerospace and France’s Safran and produces LEAP engines for all of Boeing’s MAX jets as well as half of Airbus’ A320 family of aircraft. The European plane maker also relies on Pratt & Whitney for many of its A320s as well.
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