Airbus: Between Recovery and Production Turbulence

The Airbus workforce is well accustomed to the intensive end-of-year period that occurs annually. However, this year's final push is more akin to a marathon, as the European aircraft manufacturer strives to meet its promised delivery targets despite ongoing production delays and supply chain issues curbing output—during a time when American rival Boeing is grappling with its own difficulties. The annual delivery targets of Airbus and Boeing are crucial indicators of the health of these two dominant players in the aircraft industry. Additionally, deliveries generate substantial cash flow, as airlines typically pay the bulk of the purchase price upon delivery. In light of the aftermath of an incident at Boeing that shook confidence in the company, Airbus has been able to solidify its leading position. Yet, even during the weakness of the US rival, Airbus could not fully capitalize on the increased demand—delivery delays for engines, labor shortages, and component scarcity hampered potential. Sash Tusa, an analyst at Agency Partners, notes that Airbus was unable to fully exploit Boeing's weakness due to the supply chain problems and considers this "a major missed opportunity." The successful A321neo model is particularly affected, as Airbus is not able to produce this type quickly enough. The group faces the challenging task of delivering around 200 aircraft in the final two months of 2024 to meet its annual targets—an ambition many analysts consider overly optimistic. Airbus began 2023 with a record order backlog but had to adjust its annual target from 800 to approximately 770 in June and postponed the production target for the A320 family from 2026 to 2027. These adjustments led to a decline in stock prices, which have fallen by 1.3 percent since the beginning of the year. Airbus CEO Guillaume Faury acknowledged the challenges and emphasized that "we have more demand for our products than we can deliver." The introduction of the new A321XLR model nevertheless brings new opportunities for long-haul routes. However, delays continue, prompting customers like AerCap to defer deliveries. The aircraft manufacturer launched the internal program "Project Lead" to optimize costs and focus on production increases. Yet challenges remain large, particularly concerning the supply of engines from suppliers such as CFM International and Pratt & Whitney. Airline executives like Lufthansa's Carsten Spohr express dissatisfaction with the delays at Airbus and Boeing. Spohr describes the current capacity shortage as unprecedented and extremely frustrating.