Airbus Faces Challenges in Meeting Aircraft Delivery Targets

Investing.com — Airbus (EPA:AIR) is at risk of missing its 2023 target of 770 aircraft deliveries, according to analysts from Bernstein in a note dated Wednesday.

The aerospace company delivered 50 aircraft in September, totaling 497 deliveries for the year thus far. To meet its annual goal, Airbus needs to deliver over 270 aircraft in the fourth quarter, a significant increase from its previous performance.

> “We now see risks to reaching the full-year guide of 770 deliveries (already lowered from 800 in June), and lower our forecast to 750,” said analysts at Bernstein.

These challenges are not new for Airbus. The company has struggled with a shortfall in key components, particularly engines and interior fittings, essential for final aircraft assembly.

The supply of LEAP and GTF engines continues to be problematic, with manufacturers unable to meet demand. In September, GE Aerospace reported that its LEAP engine deliveries were improving at a slower pace than expected, further complicating Airbus's challenges.

The GTF engine supply has also been strained by the need for spare engines for grounded aircraft, causing additional delays in production schedules.

Airbus’s supply chain issues extend beyond engines. Delays in seat deliveries and other interior components have further hampered its production targets. Spirit AeroSystems (NYSE:SPR), a major supplier for Airbus, has faced significant setbacks in delivering essential components like landing gear and auxiliary power units.

While some progress is being made, these ongoing challenges continue to slow down the production line, casting doubt on the company’s ability to ramp up in the fourth quarter.

Despite these difficulties, Airbus has not officially revised its full-year guidance and is expected to reaffirm its target during the third-quarter earnings announcement.

Historically, Airbus has executed a large number of deliveries in December, sometimes surpassing 90 aircraft in the final month of the year. However, if conditions do not improve by early December, Airbus may need to adjust its delivery forecast, similar to events in 2022.

Bernstein also raised concerns for 2025 and beyond, suggesting that supply chain issues may linger. The analysts reduced their delivery expectations for 2025 from 870 to 820 units, and for 2026 from 1,000 to 910 units, indicating that Airbus’s production ramp-up could be slower than previously anticipated.