Toulouse: Airbus Group NV reported a 23 per cent drop in first-quarter profit as its two newest jets suffer delivery delays, and said fresh problems with the troubled A400M transport plane could hurt future earnings.
A ramp up in production of the A320Neo will be delayed until the second half as Pratt & Whitney works to fix an engine glitch, Airbus said Thursday, adding that the narrow-body model faces other supply-chain issues.
Supplier bottlenecks in the production of cabin interiors for the twin-aisle A350 are also becoming increasingly challenging, and production and delivery of the A400M has been hit by unexpected issues with the propeller gearbox on the plane’s four engines that could have a significant financial impact, Airbus said.
Chief Executive Officer Tom Enders stuck with his forecast for 2016 earnings at least matching last year’s level, saying Airbus has the capability to claw back the delivery shortfall. Earnings before interest and tax fell to 501 million euros ($568 million) in the quarter from 651 million euros a year earlier, excluding one-time items, while sales rose 1 per cent to 12.2 billion euros.
‘Stable’
“We expect a stable financial performance but deliveries, cash and earnings will be heavily loaded towards the end of the year,” Enders said. The Toulouse, France-based company aims to hand over 650 aircraft in 2016, up 15 on 2015.
Airbus’s upgrade of the best-selling A320 has become a headache after an overheating issue afflicting new geared turbofan engines led launch customer Qatar Airways Ltd. to refuse deliveries. With Pratt & Whitney promising an engine fix by midyear, the plane maker handed over only 103 A320 narrow-bodies in the quarter, down from 109 in the first three months of 2015.
The Leap engine from the CFM International venture of General Electric Co. and Safran SA offered as an alternative to the Pratt GTF on the A320neo has yet to be certified and some work remains to be done, Chief Financial Officer Harald Wilhelm said in phone briefing.
Airbus delivered four A350s in the quarter out of a total of 50 it aims to hand over this year, with supplier issues curbing the supply of galleys and other interior furnishings.
‘Stress’
“Clearly the accumulation of the A320 ramp up and of the A350 puts quite a lot of stress into our system, but also on the supply-chain side,” Wilhelm said.
The CFO said Airbus is still assessing the gravity of the problem affecting the A400M’s gearbox — first revealed by the German Defense Ministry on April 1 — in conjunction with GE’s Italian Avio unit, which makes it. Wilhelm cautioned that the company may no longer be able to deliver the 20 transport planes targeted for this year.
The A400M has been Airbus’s biggest bugbear in recent years, with repeated delays causing it to enter service five years late. One plane crashed in Spain last May, killing four people on board and leading to flights to be halted for weeks after software issues caused a power failure in three engines.
Airbus’s net income fell 50 per cent to 399 million euros in the first quarter from 2014’s figure of 792 million euros, which was swelled by a 697-million euro gain from the sale of a 17.5 per cent stake in Dassault Aviation SA.
The company said it’s continuing to work with export-credit agencies after reporting mistakes and omissions in information provided on consultants and other third parties in previous applications relating to the UK It aims to restore the financing “in the near future.”
