Airbus Stock – Airbus Deliveries Surge: November Sees Over 80 Jets Delivered
Airbus Stock – Airbus saw a significant rebound in jet deliveries in November, with more than 80 jets delivered, marking a sharp increase compared to previous months. This surge helped the planemaker regain momentum towards its end-of-year targets after a slowdown during the summer months. Industry sources confirmed that deliveries rose by at least 25% compared to the same month last year, bringing the total number of aircraft delivered this year to 640, with just around 110 jets remaining to be delivered by the end of 2024.
November Deliveries Soar: A Strong Recovery for Airbus
The November delivery spike came after Airbus and its engine supplier, CFM, reached an agreement to resolve short-term engine supply issues. This agreement follows a mid-year profit warning partly caused by engine shortages that had impacted production. Industry insiders revealed that Airbus delivered over 80 jets in November, marking its highest November total since 2018, when the company delivered 89 jets. This sharp increase in deliveries brings the company closer to its revised annual target of around 770 jets, down from the previously set goal of 800 aircraft.
Despite the impressive November performance, Airbus still faces challenges. The company is currently sold out, struggling with fragile suppliers, and it has been navigating supply chain disruptions. The new target of 770 jets may still be out of reach due to these ongoing issues, with analysts estimating that a delivery total of 765 jets is more realistic.
Boeing Struggles as Airbus Surges Ahead
While Airbus is accelerating its production, Boeing, its U.S. rival, is experiencing delays in its own production efforts. Boeing has signaled a gradual return to full output after a strike affected its production lines. According to Cirium Ascend, a UK-based consultancy, Boeing delivered approximately 12 jets in November, a stark contrast to Airbus’s strong performance.
The slow production recovery at Boeing is partly due to the company’s careful approach to rebuilding its operations after the strike, as it remains under close scrutiny by U.S. regulators. In contrast, Airbus has capitalized on the situation, increasing its deliveries, although it remains vulnerable to supply chain issues, including engine shortages and production limitations.
The Impact of the CFM Agreement on Airbus Deliveries
One of the main drivers behind the sharp rise in Airbus deliveries was the recent engine supply agreement between CFM and the company. CFM, a joint venture between GE Aerospace and Safran, agreed to temporarily prioritize supplying engines to Airbus to make up for previous delays. This deal was crucial for Airbus as it navigated production setbacks caused by a lack of engines earlier in the year.
Safran’s CEO Olivier Andries confirmed that CFM had diverted some engines to Airbus temporarily to help the company meet its year-end delivery goals. This shift in engine supply is expected to revert in January 2024, when Airbus plans to scale back production.
Concerns Over Engine Supply Shifts and Margins
The temporary diversion of engines to Airbus has raised some concerns about the potential impact on margins for CFM and its partners. Engine manufacturers typically generate a higher margin from aftermarket activities, such as engine maintenance and spare parts sales, than from supplying engines for new aircraft. This shift could affect their long-term profitability, even though it benefits Airbus in the short term.
However, Bernstein analyst Douglas Harned noted that CFM could adjust its engine supply schedule to balance both Airbus’s demand for new engines and the company’s needs in the aftermarket sector. According to Harned, this strategic shift allows CFM to help Airbus meet its delivery targets while still maintaining a strong position in the aftermarket business.
Airbus’ Delivery Outlook for 2024: Targets and Challenges Ahead
Looking ahead, Airbus’s delivery outlook for 2024 remains uncertain. While the company is targeting around 770 deliveries for the year, supply chain constraints and ongoing issues with engine availability may hinder its ability to meet this target. Analysts, however, are cautiously optimistic that Airbus can reach a figure close to 765 jets, especially after the recent CFM engine agreement and a strong push in November.
Rob Morris, head of global consultancy at Cirium Ascend, believes that Airbus’s recent delivery surge could be the change needed to get the company closer to its target. Still, Morris emphasized the need for Airbus to maintain a strong delivery pace to generate the revenues and cash flow required to keep its operations on track.
In the coming months, Airbus will need to continue managing its supply chain carefully and monitor engine supplies to avoid any potential disruptions. With Boeing facing production delays and Airbus pushing to meet its targets, the competition in the aerospace industry remains fierce, and both companies will have to navigate numerous challenges as they move into 2024.
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