Why Airbus will deliver fewer jets this year
What's the story
Airbus has revised its 2025 aircraft delivery target downwards, owing to production issues with its popular A320 jet. The company now plans to deliver around 790 aircraft this year, which is 30 less than the original target of 820. This revision comes after a "recent supplier quality issue on fuselage panels impacting A320 family delivery flow," as per Airbus.
Technical difficulties
Airbus faces multiple challenges
The revision comes after a series of technical difficulties for Airbus. The company had to call for an urgent software update for some 6,000 A320 aircraft over a potential glitch in the cockpit computer's interaction with flight controls. Further compounding its woes, Airbus also flagged a quality issue with certain fuselage panels of the same jet model, prompting a major inspection of 628 aircraft already in service or production.
Market reaction
Analyst comments on Airbus's revised delivery target
Commenting on the revised delivery target, Dudley Shanley, an analyst at Goodbody, said in a note that it was clear for some time that the ramp-up needed to meet the original target was too high. This is not the first time Airbus has had to revise its delivery goal. Last year too, it had cut its goal by 30 units to around 770 aircraft mid-year.
Financial stability
Financial targets remain unchanged
Despite the delivery target revision, Airbus has maintained its financial targets for the year. The company still expects adjusted earnings before tax and interest at around €7 billion, and free cash flow before customer financing at about €4.5 billion. This stability in financial guidance has given some relief to investors amid the ongoing challenges with aircraft deliveries.
Quality control
Inspection process for affected aircraft
In the wake of the panel quality issue, Airbus is inspecting all affected aircraft. The company has assured buyers that a "significant portion" of the panels are expected to meet specifications. The faulty panels were supplied by Sofitec Aero SL, a Seville-based supplier. However, this inspection process could take three to five weeks and may disrupt normal production schedules due to additional labor requirements.