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Airbus lowers its output target and lowers its 2022 delivery forecast

Airbus abandoned a numerical forecast for jet deliveries and a deadline for its primary production goal on Tuesday, but it kept its financial targets.


Airbus lowers its output target

PARIS, Dec 6, 6:55 Am (Reuters) - Airbus on Tuesday abandoned a numerical forecast for jet deliveries and a date for its key production goal but maintained financial targets as it limped towards the end of a year haunted by disruption in factories and supply chains.

The world's largest plane maker said its previous target of "around 700" deliveries in 2022 was now out of reach but that it did not expect to fall "materially short" of the estimate. Reuters reported on Friday that the target was under review after November deliveries had fallen short of expectations.

Airbus also confirmed a Reuters report it had delivered a net total of 563 aircraft between January and November after adjusting for the earlier cancellation of two jets caught up in Western sanctions against Russia over the Ukraine war. That included 68 in November, compared with what suppliers had described as an industrial planning target of 80. The announcement, originally due on Dec. 8, was brought forward by two days.

Jefferies analyst Chloe Lemarie said in a note to investors that she interpreted the new comments as pointing to around 680 potential deliveries in 2022. The delivery crunch immediately set the stage for an uncertain production outlook next year. Once closely tied, production and deliveries have become disconnected since the pandemic hit demand and rippled through supply chains.

Airbus reaffirmed an interim production goal of 65 A320neo-family jets a month but withdrew its implementation date, saying instead it would adjust the speed of the ramp-up during 2023 and 2024.

It said it still planned to reach an ultimate target of 75 such single-aisle jets a month, but adjusted the deadline to the "middle of the decade" from 2025.

Airbus had previously planned to reach 65 a month by early 2024, having pushed this back from mid-2023 earlier this year, when it also lowered its original forecast of "around 720" deliveries to the now discarded target of "around 700".

The downgrades partly follow a stand-off between Airbus and engine markers over supplies. Engine makers are juggling demand for new jets with the maintenance of existing fleets.

That led to what one person involved described as tough negotiations, though executives also highlight wider shortages. The downgrades are also a disappointment for Airbus chief executive Guillaume Faury, who has emphasized transparency in production goals, especially the later target of 75 a month, in a bid to shore up supplier support for investments in higher output.

One industry source described it as a "slight loss of face". Airbus is however expected to argue that it faces exceptional uncertainty this year, and Faury said last week that the environment "remains very complex".

The rate of production of the A320neo and its rival, the Boeing 737, set the tempo for global supply chains and drive a large proportion of aerospace industry profits. Boeing is producing more slowly as it recovers from successive safety and pandemic demand crises.

Airbus has said it aims to end the current year at a production rate of 50 A320neo-family aircraft a month, compared with 60 before COVID-19.

The speed of the production increase will depend in part on how many 2022 jet deliveries get pushed into 2023. It is also linked to demand, with global airlines issuing upbeat comments on industry profitability next year.

So far signals remain mixed. Airbus is pushing buyers to take delivery of jets scheduled for this month, even though it has also started delaying further deliveries planned for 2023, some of which may spill into 2024.

Not all buyers are willing to co-operate. Sources have said some lessors are objecting to taking already-delayed jets in the last week of the year, fearing an immediate drop in their resale value when the valuation calendar trips over to 2023 in January.

Airbus meanwhile said it had booked 29 new orders and 14 cancellations in November. So far this year it has taken orders for 1,062 planes or a net total of 825 after adjusting for cancellations. Boeing, which has been lagging on orders and deliveries so far this year, will issue new data next week.

Source

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