French planemaker Airbus cut its delivery guidance early Wednesday after a series of issues related to its A320 aircraft.
On Monday, reports emerged of a flaw said to affect dozens of A320-family aircraft. Airbus later said it had identified a quality issue regarding a “limited number” of metal panels, and that the source of the issue has been “identified and contained.” It came after the company ordered an immediate software fix for around 6,000 A320-series aircrafts on Friday, forcing a large chunk of it’s narrow-body fleet to be grounded, stranding travellers worldwide.
The Paris-traded stock dropped on the news of the panel issue. It fell nearly 7% Monday and Tuesday as investors appeared spooked by the prospect of more widespread quality issues, like the ones that embroiled its rival Boeing.
The company attributed the revised delivery guidance to “recent supplier quality issue on fuselage panels impacting its A320 Family delivery flow.” The company is now targeting 790 commercial aircraft deliveries in 2025, 30 fewer than its previous guidance.
It maintained its financial guidance given in late October, still seeing adjusted earnings before interest and taxes of 7 billion euros and free cash flow before customer financing of around 4.5 billion euros.
Shares were up 4.3% as of 3:45 p.m. Paris time (9:45 a.m. ET) following the renewed guidance, issued early Wednesday morning.
Airbus share price this year
“The 30 aircraft removed from the delivery guide this year are not all expected to require a parts change, but for now only require a non-destructive test to be performed,” noted Jefferies analysts.
“As a reminder, this part is dual-sourced with only one of the supplier facing a quality escape, which has already been resolved at the production level.”
The issue with Airbus’ fuselage panels was related to parts supplied by Spanish company Sofitec Aero, a person familiar with the matter, who preferred to remain anonymous, told CNBC.
CNBC reached out to Sofitec Aero for comment.
Sector-wide problems
The software update Airbus issued followed a Oct. 30 incident where an Airbus A320, operated by JetBlue, experienced a sudden drop in altitude after a flight control issue, resulting in injuries.
The plane, which was en route from Cancun, Mexico to New Jersey, made an emergency landing in Tampa, Florida.
Airbus’ woes come as rival Boeing has been battling stubborn quality issues and increased scrutiny after a door plug blew out mid-flight on a Alaska Airlines 737 MAX in January last year. There have been signs of recovery for the firm as CFO Jay Malave said Tuesday that Boeing expects deliveries of both its 737 and 787 jets to be up next year.
CEO Kelly Ortberg, who was brought in last year to turn the company around, said the company was starting to see improvements in its business, including slashing its quarterly losses.
— Laya Neelakandan contributed to this report