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Airbus struggles to cash in on Boeing's 737 Max crisis
AIRBUS SE cut its full-year delivery target and said cash flow will be lower than expected as it struggles to capitalise on the grounding of Boeing Co's 737 Max.
The European planemaker now expects to hand over about 860 jets this year, down from a previous range of 880 to 890 planes, as production challenges slow output of A320neo-series jets. Free cash flow is likely to be about 3 billion euros (S$4.5 billion) rather than 4 billion euros, it said in a statement on Wednesday.
Airbus has struggled to keep up with demand for the so-called cabin flex version of the narrow-body's A321 variant. The configuration allows for more seats or longer range, by adding a new rear section and changing the door layout. The holdups come at a time when demand for the model is surging, frustrating Airbus's attempts to exploit the idling of the rival Max.
The layout will become standard in 2020, and Airbus said it's continuing to work on how to increase A321 production capacity.
"We are focused on the A320neo ramp-up and improving the industrial flow while managing the higher level of complexity," chief executive officer Guillaume Faury said in the release.
Adjusted profit before interest and tax rose 2 per cent to 1.6 billion euros, more than the 1.36 billion euros estimated by analysts, though that was before one-time costs from the A380 superjumbo programme, which is being wound down, and Germany's suspension of defence exports to Saudi Arabia.
Airbus won orders for 303 commercial jets through September, excluding cancellations, versus 170 at Boeing. Sales efforts have generally taken second place to the production push, with many airlines put off by long delivery times amid record backlogs, or waiting to see when the Max will fly again.
The order picture improved on Tuesday when Indian budget airline IndiGo announced a 300-plane deal for the A320neo worth US$33 billion at list prices and ranking among Airbus's biggest ever contracts.
Boeing's tab for the Max grounding hit US$9.2 billion in the third quarter, with the company burning through more cash in the period than for almost 25 years.
CEO Dennis Muilenburg was grilled by Congress on Tuesday and found himself defending his company's right to approve its own designs, and quizzed on why the Max was allowed to remain in service after the first of two fatal crashes that killed 346 people.
Airbus shares have surged 50 per cent this year, giving the Toulouse, France-based planemaker a market value of 98 billion euros as at Tuesday's close. Boeing has gained 8.2 per cent. BLOOMBERG