Airbus says tougher to meet jet delivery goal after snags

© Reuters. Airbus says tougher to meet jet delivery goal after snags

By Laurence Frost

PARIS (Reuters) - European planemaker Airbus softened its key target for jet deliveries on Wednesday and warned that reaching it would be a "greater stretch" after a sequence of industrial problems.

The cautious tone on deliveries - which implied a 2 percent cut in the annual target by changing its parameters to include a recently acquired Canadian jet - came despite higher than expected third-quarter core earnings and strong demand from airlines.

The maker of jetliners, satellites and helicopters said it had made an adjusted operating profit of 1.576 billion euros ($1.8 billion) in the quarter on revenues of 15.451 billion.

Analysts on average expected third-quarter adjusted operating profit of 1.441 billion euros on sales of 15.316 billion, according to a Reuters poll.

Airbus shares rose 0.3 percent to 94.21 euros.

The company has been struggling with fresh industrial problems as production of its fast-selling A321neo passenger jet hit a snag in Hamburg, Germany, even as bottlenecks eased at some engine makers.

The problems with the A321neo, a model central to Airbus's ambition to dominate the top end of the single-aisle market and

thwart Boeing's plans for a new mid-sized passenger jet, were first reported by Reuters.

"A lot remains to be done before the end of the year to fulfill commitments," Airbus said in a statement.

Airbus stuck to its headline target of around 800 commercial deliveries in 2018 but disclosed this now included 18 deliveries of the Bombardier CSeries jet, renamed A220.

Delegates at a Hong Kong gathering this week had warned that Airbus faced a challenge to meet the crucial goal.

Airbus also trimmed its cashflow target for the year.

INDUSTRIAL CHALLENGES

Delays in supplies of engines for medium-haul jets from Pratt & Whitney and French-U.S. supplier CFM International are receding but Britain's Rolls-Royce (LON:RR) last week cut the number of engines it plans to deliver for the wide-body Airbus A330neo this year.

"We have engines and we have the airframes but the whole industrial planning had to be reshuffled time and again ... next to some industrial challenges on our own operation," Finance Director Harald Wilhelm told analysts.

Boeing (NYSE:BA) too has suffered industrial problems, but the world's largest planemaker last week reported stronger-than-expected profits, reflecting continued strong airliner demand.

The commercial aerospace sector is in the eighth year of an extended upcycle but there are some concerns about airline profitability that usually drives jet orders, speakers at the Airline Economics conference in Hong Kong said this week.

Even so, planemakers and their suppliers are pushing production to record levels based on eight years' worth of new plane orders, and their attention is focused on ironing out flaws in an already stretched global supply chain.

Airbus said talks aimed at overhauling a loss-making contract with European buyer nations for the delayed A400M military airlifter were advancing "a bit slower than planned," as Airbus focuses on commercial deliveries and securing the ramp-up of the A320neo family, which includes the A321neo.