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Airbus faces steep climb in 'make or break' delivery year

Stock Markets Mar 15, 2023 02:05AM ET
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2/2 © Reuters. FILE PHOTO: A logo of Airbus is seen at the entrance of its factory in Blagnac near Toulouse, France, July 2, 2020. REUTERS/Benoit Tessier//File Photo 2/2
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By Tim Hepher and Valerie Insinna

PARIS (Reuters) -Airbus and U.S. rival Boeing (NYSE:BA) were locked in a dead heat for deliveries for the first two months of the year, but the European planemaker has a tougher task to meet annual forecasts amid ongoing supply woes.

Both groups delivered a total of 66 jets in January and February. But whereas this makes up some 12% of market forecasts for Boeing's 2023 deliveries, Airbus has secured just 9% of its 2023 target of 720 jets, below the trend for this time of year.

After missed targets in 2022, Airbus Chief Executive Guillaume Faury has told executives that 2023 will be "make or break" for the company's industrial reputation, industry sources said.

It is the second call to arms in a month after sources said he previously warned January had delivered a "wake-up call".

Airbus declined to comment on internal meetings.

It set a 720-plane goal in 2022 before cutting it to 700 and then abandoning it in December, citing weak supply chains.

In February, Airbus delivered 46 jets, up from 20 in January, for a total of 66 in the first two months of 2023. That compares with 79 in the same period of 2022.

Boeing said on Tuesday it delivered 28 aircraft in February, down from 38 in January amid a pause in 787 deliveries.

It is not unusual for Airbus to start the year more slowly than Boeing after running flat-out in December, but this year's cumulative tally lags behind the average for the European firm.

In the 10 years to 2018 - ignoring distortions from the Boeing MAX crisis in 2019 and COVID-19 disruptions since 2020 - Boeing secured an average of 13% of its annual deliveries in the first two months, while Airbus averaged 12%, Reuters calculates.

To catch up with last year's first-quarter total of 140 net deliveries alone, Airbus would have to stage the second-sharpest increase from the end-February total seen in the past 20 years.

Airbus is not alone in facing industrial problems. Lessors have said both jetmakers are delivering planes three-to-six months late, though Airbus is pushing to maintain higher industrial output.


Faury told reporters last month that although he had been "disappointed" with January's slow start, Airbus was on track to meet its annual delivery target.

"We have worked so much with suppliers in 2022 to overcome problems that we have a very deep and granular understanding of their...ability to ramp up and their own capacities. What we don't know is how the world will surprise us in 2023," he said.

Airbus has for the most part blamed industrial delays on disruption at suppliers, though sources say its own internal operational performance and controls are also under scrutiny.

The challenges appear to have captured the attention of the Airbus board, which said in a report issued ahead of the company's upcoming shareholder meeting that it planned to hold in-depth sessions on supply-chain management and other issues.

The Federal Reserve Bank of New York said last Monday global supply chains had returned to normal, with pressures dropping to the lowest level since before the pandemic.

But analysts say scarce labour and the impact of the Ukraine war on energy prices in Europe continue to hamper aerospace.

Engine makers in particular are expanding to add dual or even treble sources for certain parts, Kevin Michaels, managing director of Aerodynamic Advisory, told Reuters.

On Thursday, the head of France's Dassault Aviation highlighted the unpredictability in supply lines.

"We are managing but it is real gymnastics every day," Eric Trappier told reporters. "When a supplier says it isn't doing well and can't deliver, reaction time is close to zero."

Airbus faces steep climb in 'make or break' delivery year

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