If you want to imagine an aviation manager’s nightmare, then a visit to Berlin Airport is worthwhile. Lufthansa planes that have not been able to fly for weeks are parked on the apron. There is a lack of spare parts, especially for the engines. Hundreds of jets from many airlines are currently grounded around the world, even though demand for air travel is higher than ever before.
What the airlines have been struggling with for a long time has now finally become a reality for Airbus. On Monday evening after the stock market closed, the company announced a profit warning that was quite something and abandoned its production targets for the coming years – its own suppliers can simply no longer keep up with the planned growth. The next morning, the share price temporarily lost up to eleven percent of its value and the shares of the Munich-based engine manufacturer MTU Aero Engines also fell by six percent.
Specifically, Airbus has abandoned its goal of completing production of the short- and medium-haul series by 2026. A320neo to up to 75 aircraft per month. This is now only to be achieved a year later. The company is currently building between 40 and 50, with the numbers varying greatly depending on the month. The target of building a total of at least 800 jets this year (after 820 in 2023), which analysts originally perceived as very conservative, can no longer be achieved. Airbus has now set the mark of 770 aircraft, falling back to the level of 2022, when the group only began to expand production again after the corona pandemic.
In addition, Airbus no longer expects an adjusted operating profit of around seven billion euros for the current year, but only 5.5 billion.
Supply chain problems have plagued aviation for years now. During the pandemic, many companies laid off employees and, when demand returned, had great difficulty finding enough new mechanics and engineers. Some suppliers such as Spirit Aerosystems, which is absolutely essential for both Boeing and Airbus, have run into extreme financial difficulties. As a result, delivery dates have been delayed – airlines now routinely wait at least several months longer than planned for their orders from Airbus. A320neo-Jets. Production is sold out until the early 2030s, based on the planned ramp-up.
Engine supply bottlenecks are not the only problem
Both aircraft manufacturers, Boeing and Airbus, had hoped until recently that the situation would slowly improve and that they would be able to deliver the many aircraft they had sold to their customers reasonably punctually. But recently the suppliers have become even more unreliable.
“This is a new situation that we did not expect,” said Airbus CEO Guillaume Faury to analysts. Without the cuts in its own production, Airbus would soon have been building aircraft for which there are no engines and thus quickly built up an inventory worth billions. The situation with engines in particular has “significantly worsened” in recent weeks, said the Airbus boss. The engines for the A320neoseries are supplied by two competing consortia: CFM International with GE Aerospace and the French company Safran and a group around the US manufacturer Pratt & Whitney with, among others, MTU Aero Engines.
But the engines are not the only problem. Many suppliers have also fallen behind on the cabin equipment, which Airbus has largely outsourced. Often, this involves missing parts for the galleys or toilets. According to industry sources, the situation is particularly difficult for seat manufacturers. They can no longer keep up with the sheer volume of orders. Airbus sources also say, however, that quality defects are piling up, meaning that lengthy tests for the seats often have to be repeated.
The situation is particularly critical at Spirit Aerosystems. The company emerged from a former Boeing plant in Wichita, Kansas, and builds the fuselage of the Boeing 737But Spirit is also important for Airbus, because the company is responsible for the wings of the A220series and for components of the long-haul jet A350 responsible. Because Spirit is in such existential difficulties and Boeing also wants to ensure the quality of its supplier’s production, the aircraft manufacturer is planning to buy back the former subsidiary. Airbus, in turn, is to take over the factories that work for its own programs. The complicated transaction between the three parties could be announced in the coming days.
Airbus is also experiencing greater problems than previously known with important space programs and has now had to make write-offs of 900 million euros. Faury announced that he would rethink the strategy for the division. It is conceivable that parts could be sold or incorporated into partnerships.