Airbus misses profit estimates as deliveries slow amid engine crunch

An Air Transat Airbus A321neo approaches for landing in Lisbon at sunrise, Sunday, June 23, 2024. (AP Photo/Armando Franca)

Europe’s Airbus posted a first-quarter core profit that more than halved on Tuesday, well below market expectations, as the world’s largest planemaker delivered fewer aircraft amid an engine supply crunch that is handing rival Boeing a chance to claw back ground.

Adjusted operating profit fell 52 per cent year-on-year to 300 million euros (US$351 million), while revenue declined 7 per cent to 12.65 billion euros in the three months to March 31.

Analysts had on average forecast adjusted operating profit of 348 million euros on revenue of 12.39 billion euros, according to company-compiled consensus data.

The European planemaker is racing against time to deliver the 870 aircraft it has targeted for 2026 after handing over 114 commercial aircraft in the quarter, down 16 per cent from 136 a year earlier. That figure is also below the 143 aircraft delivered in the same period by Boeing, which is regaining momentum under CEO Kelly Ortberg.

The group left its full-year guidance unchanged, reaffirming a target production rate of between 70 and 75 A320-family aircraft per month by the end of 2027 - a goal it trimmed in February from an earlier ambition of hitting 75 per month by the start of that year.

ENGINE DELAYS HURT JET DELIVERIES

Even as orders remain strong, the France-based company is contending with late engine shipments from U.S.-based supplier Pratt & Whitney, which are falling short of its needs. In an escalating dispute over late engine shipments that is threatening its efforts to lift aircraft production, Airbus is now pursuing potential damages, two people familiar with the matter told Reuters in March.

Chief Executive Guillaume Faury said Airbus remained at an impasse with Pratt over engine deliveries, but stressed that both sides were actively working to find a resolution.

“We’ve not come to the point where we have an agreement,” Faury said, “but we continue to work both ways — the dispute on the one hand and a negotiation on the other hand to constructively resolve the disagreement we have.”

Adding to the quarter’s delivery shortfall, Airbus cited an administrative delay impacting nearly 20 aircraft for Chinese customers, though the issue has since been resolved.

Faury said demand in the Middle East had not been affected, with no cancellations or postponements reported. High jet fuel prices, he said, were driving demand for fuel-efficient aircraft, even as some airlines reduce flight frequencies.

Reporting by Gianluca Lo Nostro; Editing by Matt Scuffham and Nick Zieminski