Story ID: 028 ISairbusresults07272017
Airbus Remains Optimistic on A320neo Delivery Target
By: Ian Sheppard
Caption: Despite engine issues, CEO Tom Enders calls plan to deliver 200 A320neo-family narrowbodies this year "a realistic target"
Word Count: 581
Airbus expressed confidence it can deliver 200 A320neos and 700 commercial aircraft overall this year despite continuing in-service problems plaguing A320neos powered by Pratt & Whitney PW1100G geared turbofans. The problems, ranging from carbon seal defects to premature combustor liner wear, mean that by the end of June the Toulouse, France-based manufacturer had delivered only a third of the GTF-powered aircraft it had expected to ship by now, while 30 to 35 remain parked without engines, Airbus CEO Tom Enders admitted in a call with analysts in late July. Neverthless, he said the 200-delivery projection for both GTF- and CFM Leap-1A-powered neos “is still a realistic target.”

“We have seen frustrated and angry airline customers, but we don’t see them leaving the GTF,” Enders continued. “The key is that Pratt & Whitney supports those customers.”

Enders further reflected on the “healthy commercial aircraft environment” and “robust backlog of 6,771 aircraft which supports our ramp-up plans,” before fielding questions about the engine issues and Qatar Airways’ cancellation of four A350 widebodies in June, which potentially presents a larger problem because, as Enders pointed out, Qatar stands as Airbus’s largest customer for the type.

“Clearly we are dependent on the engine manufacturers delivering on their commitments to us and to the airlines,” he said of the narrowbody situation, noting that Airbus at the moment relied on its engine suppliers to fix the problems and support airlines encountering less than satisfactory in-service reliability.

Enders said the OEM booked gross orders for 248 airplanes in the first half of the year (203 net, after cancellations). “We’re essentially sold out until 2022 on single-aisle aircraft,” he said, adding that the commercial aircraft order book stood at €981 billion ($1.15 trillion) as of the end of June.

Airbus remains on track to accelerate the delivery rate of A350s to 10 per month by the end of next year—Enders characterized the process as “going relatively smoothly”—and that A350-1000 flight-testing remains on track. He said negotiations continue with Qatar Airways but noted that the situation remains “challenging” in the Middle East, following tensions between Qatar and its Arab neighbors.

However, Enders reported that circumstances surrounding the A380 "are not so great” as the company lowers the delivery rate from 12 to only eight aircraft a year by 2019. He denied the decline made the program too costly to continue, however, and said Airbus remains hopeful the rate will pick up again in the future.

“Our operations are continuing under a lot of stress and strain but I’m optimistic," concluded Enders. "I’m not preparing you for a profit warning or anything. We have a great team who will show what they can achieve in the second half of the year. I’m sure we will succeed with our plan with a little help from our engine friends.”

“We should have a small tailwind on the A350 now but a small headwind on the A380 with the volume drop this year over last year,” added Airbus CFO Harald Wilhelm.

Overall, Airbus Group’s cash position fell to €7.9 billion from €11.1 billion between June last year and June this year, as the A400M military transport continues to “weigh heavily on free cash flow,” said Wilhelm. However, he ended on a positive note, saying he expects "a return to some ECA (Export Credit Agency)-backed financing” for its airliners.

, full_html