Airbus just cut its A320 delivery guidance. Here’s why.
french planer Airbus It cut its delivery guidance early on Wednesday after a series of problems with its A320 aircraft.
On Monday, reports emerged of a defect said to affect dozens of A320 family aircraft. Airbus later said it had identified a quality issue with a “limited number” of metal panels and that the source of the problem had been “identified and contained”. This comes after the company ordered an urgent software fix for around 6,000 A320 series aircraft on Friday; This resulted in the grounding of much of its narrow-body fleet and stranded passengers around the world.
Shares traded in Paris fell on news of the panel incident. It fell nearly 7% on Monday and Tuesday as investors feared the possibility of more widespread quality problems like those that have also embroiled rival Boeing.
The company attributed the revised delivery guidance to “a recent supplier quality issue on fuselage panels impacting the A320 Family delivery flow.” The company currently targets deliveries of 790 commercial aircraft in 2025; that figure is 30 fewer than his previous estimate.
Maintaining the financial guidance it gave at the end of October, the company saw adjusted earnings before interest and tax of 7 billion euros and free cash flow before customer financing of around 4.5 billion euros.
Shares were up 4.3% as of 3:45 p.m. Paris time (9:45 a.m. ET) following the revised guidance issued early Wednesday morning.
Airbus’ share price this year
“Not all 30 aircraft removed from the delivery manual this year are expected to require parts replacement, but only non-destructive testing is required for now,” Jefferies analysts said.
“As a reminder, this part is dual-sourced and only one of the suppliers is experiencing quality runaway, which has already been resolved at the production level.”
It was stated that the problem with Airbus’s body panels was related to parts supplied by the Spanish company Sofitec Aero, a person familiar with the matter who preferred to remain anonymous told CNBC.
CNBC has reached out to Sofitec Aero for comment.
Industry-wide issues
The software update released by Airbus follows an incident involving an Airbus A320 on October 30. JetBlueFollowing a flight control problem, he experienced a sudden altitude drop, causing injuries.
The plane, traveling from Cancun, Mexico to New Jersey, made an emergency landing in Tampa, Florida.
Airbus’ woes come as a rival Boeing’s has been struggling with persistent quality problems and facing increased scrutiny after an in-flight door plug exploded on an Alaska Airlines 737 MAX in January last year. There were signs of recovery for the company, with CFO Jay Malave saying Tuesday that Boeing expects deliveries of both its 737 and 787 jets to increase next year.
CEO Kelly Ortberg, who was appointed last year to turn the company around, said the company is starting to see improvements in its business, including reducing quarterly losses.
— Laya Neelakandan contributed to this report
