Airbus may have benefited from Boeing's struggles, but it isn't smooth sailing for the rival aviation giant

Pete Syme
·2-min read

  • Airbus stock fell 11% after cutting 2023 delivery targets due to supply chain issues.

  • It spells problems for airlines as Boeing has also reduced production.

  • Airbus' A320neo family outsells the 737 Max but further plans for growth may have been too ambitious.

Airbus stock dropped as much as 11% on Tuesday after it reduced delivery targets, citing supply chain issues.

The European planemaker announced Monday that it intends to deliver around 770 commercial jets this year, down from 800.

It also curbed plans to increase production of the A320neo family. Airbus had aimed to increase output from 50 to 75 a month by 2026, but the target has now been pushed back a year.

The A320neo family has outsold the rival Boeing 737 Max since 2019, when the latter model was grounded following two crashes in which 346 people died.

Further problems at Boeing arose in January, when a door plug came off an Alaska Airlines 737 Max in midair.

In the wake of that incident, Boeing's biggest customer, United Airlines, spoke of plans to switch some orders to Airbus jets.

However, Airbus has seemingly struggled to meet the increased demand.

Overall, it marks further problems for airline customers, because Boeing has also reduced its output amid its ongoing crisis.

The Federal Aviation Administration has capped production of 737 Max jets as a result of the Alaska Airlines blowout. Boeing has also slowed production of other models as it works to focus on quality control — sparking a backlash from airline bosses.

In a press release, Airbus said its commercial aircraft division is "facing persistent specific supply chain issues mainly in engines, aerostructures, and cabin equipment."

"We are facing headwinds right now; we have to bite the bullet," CEO Guillaume Faury told analysts on a call, per Reuters.

Reuters reported that Faury said engine supplies for the A320neo family had deteriorated "significantly" in recent months.

One of the two engine options is made by Pratt & Whitney, which last year announced it had discovered a manufacturing defect that would result in hundreds of planes being grounded for inspections.

According to Reuters, Faury also pointed to uncertainty around supplier Spirit Aerosystems. It's expected to be carved up with parts sold to both Boeing and Airbus.

Airbus' problems also extend to its space division, where it announced charges of 900 million euros ($965 million). Its guidance update said it would "evaluate all strategic options" including potential restructuring and M&A options.

Read the original article on Business Insider

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