Airbus, the leading global aircraft manufacturer, experienced a plunge in shares on Tuesday after it revised its yearly profit forecast downward due to intensified supply-chain problems and an incurred charge associated with its space operations. Increasing engine shortages, which have re-emerged as a ‘serious matter’, according to CEO Guillaume Faury, has unnerved investors.
Since the pandemic outbreak, the company’s supply chain has been plagued by continuous delays. The newly emerging bottlenecks will result in the delivery of around 770 commercial aircraft this year; a decrease from an earlier projection of 800. The launch of its most popular A320 family of jets has also been deferred from 2026 to 2027.
Diverging from its situation in 2022 when it faced engine shortages, Airbus is currently experiencing shortages from both, Pratt & Whitney and CFM International, which are vital suppliers to the A320. CEO Faury showed surprise at this new scenario, stating that engines had not posed a problem in 2023 and early 2024 but had now resumed to be a ‘serious matter’.
Adding to this, Faury indicated that cabin parts too were scarce, a fact accentuated by airlines’ attempts to revamp the older aircraft due their inability to secure new ones. Consequently, Airbus’ shares dipped by 12 per cent during Tuesday’s afternoon trading session. This had a widescale effect on the entire aerospace sector with Rolls-Royce experiencing a 4 per cent fall in shares and Melrose Industries seeing a 3 per cent dip in its share value.
Adamant supply chain restrictions have, for the last two years, hindered Airbus’ endeavours to completely satisfy the rejuvenated airline demand for new aircrafts post-pandemic. Robert Stallard, a specialist at Vertical Research Partners, indicated that the continuity of problems in the supply chain contradicts the story of progressive improvement. He suggests that even the extremely conservative Airbus had misjudged this outlook, emphasising the complexity of present supply-chain situation, and raising concerns about the ‘ramp plans’ of original equipment manufacturers.
Airbus has, for the second time since 2022, delayed its yearly delivery target. Earlier this month, Faury mentioned at a Berlin aerospace conference that he believed the industry would continue to face supply-chain limitations for another two to three years.
Simultaneously, Airbus announced it would take a hit of approximately €900 million in the first half of this year related to its space systems branch following a review of long-term projects by newly appointed management. The development risks stemmed from the production of elaborate and complex items. Airbus is contemplating various strategic alternatives, such as possible reorganisation, partnership models, portfolio reassessment, and M&A alternatives.
The aerospace and defence conglomerate now forecasts an adjusted pre-interest and tax earnings of €5.5 billion for this year, a downgrade from the prior estimate of up to €7 billion. Half-year results will be released by Airbus on July 30th.
This cautionary announcement coincides with Airbus nearing a deal with Spirit AeroSystems to assume the tasks the US-based supplier performs for certain programs, focussing on A220 and A350 aircraft.
This agreement will open the door for Boeing to assume majority control of Spirit, including its Kansas operations. Boeing has been negotiating with Spirit since March looking to enhance the vendor’s manufacturing practices following an inflight disintegration of a section of one of its 737 Max’s principal body in January. Spirit provides Boeing with plane bodies, and both firms are presently under an audit by the US aviation safety regulator.