Airbus cuts delivery target by 30 planes

Airbus cuts delivery target by 30 planes
Copyright 2019 CNN
The 2019 Paris Air Show saw the launch of the Airbus A321XLR, which provides extra-long range in a smaller aircraft.

Airbus is facing production issues and new US tariffs, but the company still expects to grow earnings by double digits this year on solid demand for its commercial aircraft.

The European company said Wednesday that it expects to deliver 860 commercial aircraft this year, down from a previous forecast of between 880 and 890, because of production issues with its A320neo planes.

“Ramping up production and transforming the production system is a difficult thing to do,” Airbus CEO Guillaume Faury said on a call with analysts. He said changes would ensure the company gets “on top” of production issues.

The company has run into technical snags with some aircraft engines and increased production of the A321 Airbus Cabin Flex, which allows airlines to seat more passengers through a flexible cabin design.

Yet Airbus is still on track to deliver more planes this year than its American rival, Boeing. Airbus delivered 571 commercial aircraft during the first nine months of the year, compared to 301 for Boeing.

The success of the A320neo family could help Airbus maintain that advantage.

Airbus had received more than 6,650 orders for planes in the A320neo family from nearly 110 customers around the world. On Tuesday, it revealed a blockbuster order from fast-growing Indian carrier IndiGo for 300 of the aircraft.

Boeing has meanwhile come under pressure following the crash of two of its 737 Max jets. The plane has been grounded since March while regulators investigate what caused the twin disasters.

After posting a huge second quarter loss due to a $5 billion charge to compensate airline customers affected by the Max grounding, Boeing returned to profitability in the third quarter. But that profit is still well below year-ago levels.

The divergent fortunes of the companies can be seen in their share prices: Airbus’ stock is up 54% this year relative to Boeing’s 8% gain.

Airbus said Wednesday that the success of its commercial aircraft division was behind a 51% surge in group earnings for the period to €4.1 billion ($4.6 billion). It maintained its earlier guidance of a 15% increase in full-year earnings.

Trade barriers

The planemaker said in a statement that it is “working with its US customers to manage the consequences” of US tariffs that came into effect earlier this month on Airbus aircraft imported from the European Union.

But Faury said that customer airlines in the United States will ultimately have to pay the cost of the new taxes.

The tariffs are part of a dispute over government support allegedly provided by European and US governments to Airbus and Boeing respectively.

— Chris Isidore contributed reporting.