Airbus shares fall more than 10% as aircraft manufacturer cuts profit forecast

European aerospace and defence group blames disruption to its supply chain

An Airbus SE A350-1000 XWB passenger aircraft. Shares in Airbus tumbled on Tuesday after the world’s biggest plane maker cut its annual profit forecast as its supply chain disruptions worsened and it took a charge tied to its space business. Photograph: Christopher Pike/Bloomberg

Shares in Airbus tumbled on Tuesday after the world’s biggest aircraft manufacturer cut its annual profit forecast as its supply-chain disruptions worsened and it took a charge tied to its space business.

The company’s supply chain has been beset by delays since the pandemic, but chief executive Guillaume Faury rattled investors after warning that a shortage of engines was again becoming a “significant issue”.

The fresh snarls mean Airbus will deliver “around 770″ commercial aircraft this year, down from a previous forecast of 800. It also pushed back its target of producing 75 a month of its bestselling A320 family of jets from 2026 to 2027.

In contrast to 2022, when Airbus last had engine shortages, the group is now facing shortages from Pratt & Whitney as well as CFM International, both suppliers to the A320.

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“That is a new situation that we were not expecting,” said Faury, who delivered the warning after the close of the French stock market on Monday. “Engines – that have not been an issue in 2023 and at the beginning of 2024 – are again becoming a significant issue.”

Cabin parts were also in short supply, Faury added, as many airlines were refurbishing older aircraft given the challenge of securing new ones.

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Shares in Airbus were down 12 per cent in afternoon trading. The warning hit the wider aerospace sector, with shares in engine maker Rolls-Royce falling 4 per cent and aerospace supplier Melrose Industries’ shares declining 3 per cent.

Airbus has been hit over the past two years by supply-chain constraints that have hampered its ambition to fully meet resurgent demand from airlines for new aircraft following the pandemic.

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“The continuation of supply-chain issues in commercial aircraft goes against the narrative of gradual improvement,” noted Robert Stallard, an analyst at Vertical Research Partners.

“For even the super-conservative Airbus to have got this outlook wrong is emblematic of how challenging this supply-chain situation is, and again calls into doubt the [original equipment manufacturer] ramp plans,” he added.

It is the second time since 2022 that Airbus has pushed back its annual goal for deliveries. Faury had told an aerospace summit in Berlin earlier this month that he expected industry supply-chain constraints to last for another two to three years.

Airbus also said it would record a charge of about €900 million in the first half related to its space systems business after a review of long-term programmes by new management.

It cited “complex and sophisticated products” that had created development risks. The company said it would “evaluate all strategic options such as potential restructuring, co-operation models, portfolio review and M&A options”.

The aerospace and defence group now expects adjusted earnings before interest and tax of €5.5 billion this year, down from a previous forecast of as much as €7 billion. Airbus reports results for the half-year on July 30th.

The warning came as Airbus nears an agreement with Spirit AeroSystems to take over the work the US-based supplier does for some of its programmes, notably on the A220 and A350 aircraft.

A deal will pave the way for Boeing to take over the bulk of Spirit, including its operations in Kansas. Boeing has been in talks with Spirit since March as the US plane maker seeks to improve the supplier’s manufacturing processes after the mid-air blowout of a section of the main body of one of its 737 Max aircraft in January.

Spirit supplies Boeing with the fuselages and both companies are undergoing an audit by the US’s aviation safety regulator. – Copyright The Financial Times Limited 2024