Airbus cut its jetliner-delivery goal and slowed a ramp-up in production of its best-selling narrow-body model as supply-chain issues afflicting everything from engines to microchips show no sign of easing.
The world’s biggest planemaker now aims to hand over around 700 aircraft in 2022, compared with an earlier target of 720, it said in a statement Wednesday. A build rate of 65 a month for the A320 single-aisle family previously targeted for next summer won’t now be achieved until early 2024.
The revisions shouldn’t hit Airbus’s financial performance in the short term, with the company reiterating full-year estimates for earnings and cash, but indicate significant challenges in boosting output in an economic environment beset by labor and materials shortages. A slower increase in A320 production also means a five-year order backlog may take longer to clear, impacting existing clients and potentially hurting the firm’s ability to win new business.
Airbus posted adjusted earnings before interest and tax of $2.7 billion for the first half, 2% lower than a year earlier. Analysts had forecast a profit of $2.6 billion, based on data compiled by Bloomberg.
The figure should reach $5.6 billion for the whole of 2022, up from $5.1 billion in 2021. Free cash flow is expected to amount to $3.6 billion before customer financing and acquisitions, about equal to last year.
The planemaker said it still plans to build 75 A320s a month in 2025 and is evaluating the possibility of increasing build rates for its wide-body aircraft.
The pressure to lift production was evident at this month’s Farnborough International Airshow southwest of London, where Airbus had a lackluster sales performance as rival Boeing, which has smaller backlogs, announced blockbuster deals from carriers like Delta Air Lines.
Chief Executive Officer Guillaume Faury revealed at the expo that Airbus had 26 planes built but waiting on the tarmac without engines at the end of June. Airbus is also contending with energy shortfalls as gas supplies are threatened by fallout from Russia’s invasion of Ukraine.
The performance of the company’s defense and space division was hit by rising inflation as well as sanctions linked to the war, with earnings before interest and tax 32% lower than the previous year.
Airbus also took a charge of $204 million against its A400M military-transport program, again due to inflation, according to the statement, which was published after the close of trading.
Boeing also published first-half results Wednesday that showed it turned cash flow positive in the second quarter after stepping up deliveries of its 737 Max, the chief global rival to the A320, a result that puts it on track to generate annual cash for the first time since 2018.
Revenue and the core loss per share were both worse than expected, however, extending the U.S. company’s record of missing consensus earnings estimates in all but one quarter since the start of 2021. The stock closed little changed.