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Airbus delivery challenge gets tougher with Rolls delays

It’s a setback for Rolls’ Mr East, who is trying hard to turn around the industrial juggernaut.


AIRBUS SE has a mighty challenge ahead of it, one that seems to be getting tougher. The European planemaker is targeting deliveries of around 800 commercial aircraft this year, an 11 per cent jump from 2017. To do it, Airbus needs to hand over some 300 jets in its final quarter, which would be a record. But delays with engines made by Rolls-Royce Holdings Plc are adding to the degree of difficulty.

On Friday, Bloomberg News reported that Rolls-Royce had fallen behind schedule on deliveries for Airbus's new model, the A330neo.

Rolls was aiming to provide 30 of its Trent 7000 engines to Airbus by the end of this month, which would allow Airbus to deliver 15 of the wide-body planes to customers by year-end.

But Airbus will only get 10 engines, enough for five planes. That's a 10-plane shortfall.

Getting production right is a critical task for Airbus's next CEO, Guillaume Faury, who is looking to prove his chops as president of the commercial aircraft business before formally taking over control of the group in April. But by all accounts, the target is all consuming.

Rolls-Royce notified markets that it had cut its overall delivery goal by 50 to about 500 commercial engines this year, while maintaining its profit and cash-flow targets.

For Airbus, the delays with the A330neo threaten to disrupt an already tight final quarter of 2018 that's been stretched by design and production faults with separate engines that power its single-aisle A320 jet family. IAG SA, which owns British Airways, said on Friday that its A321neo narrow-bodies have been delayed "principally related to engines, but not solely". The slower widebody handovers could reduce Airbus's full-year sales by 1.5 billion euros (S$2.4 billion) or hit earnings by about 100 million euros, Francois Duflot, an analyst with Bloomberg Intelligence, wrote in a research note.

Airbus declined to comment ahead of third-quarter results scheduled for Oct 31, when the manufacturer is expected to update markets on its production plans.

For Rolls, the factory stumbles threaten to pile new pressure on the company, which is already struggling through durability flaws with the engine's sister model, the Trent 1000, which powers Boeing Co's 787 Dreamliner. The A330neo, whose engine suffers from similar glitches, is expected to debut in the coming weeks, about a year behind its initial schedule.

It's a setback too for Rolls-Royce CEO Warren East, who is trying hard to turn around one of Britain's few remaining industrial juggernauts. In his four years at the helm, he has worked to rebuild the engineering firm from the bottom up, shedding management layers, peripheral units and outdated business practices. BLOOMBERG

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