Airbus Navigates Supply Chain Challenges Amid Boeing Strike
Friday, Oct 11, 2024 5:01 am ET
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Airbus, the European aerospace giant, finds itself navigating a complex web of supply chain challenges, despite the absence of a direct impact from the ongoing Boeing strike. In a recent briefing, Airbus CEO Christian Scherer expressed concern over critical path issues with CFM International engines and production problems at Spirit AeroSystems, which are affecting the company's operations and delivery schedules.
CFM International, a joint venture between GE Aerospace and Safran, has been a bottleneck for Airbus, with engine supply issues persisting since July. Despite some improvement in the third quarter, the company still faces pressure on a year-over-year basis. GE Aerospace CFO Rahul Ghai expects further improvement in the fourth quarter, but the challenges remain a concern for Airbus.
Spirit AeroSystems, a key supplier for both Airbus and Boeing, has also been a source of worry for Airbus. Production rates at the U.S. aerostructures supplier are not meeting Airbus' expectations, leading the company to deploy dozens of workers to affected plants to help stabilize the situation. Reuters reported that Airbus has taken measures, including deploying staff and air-freighting parts, to address concerns over the production of key structural parts for A350 and A220 jets by Spirit AeroSystems.
In response to these challenges, Airbus is taking proactive measures to mitigate the impact on its production and deliveries. The company has agreed to take on two loss-making plants from Spirit AeroSystems, which will help address some of the supply chain issues. Additionally, Airbus is boosting its presence at key suppliers to monitor performance and ensure timely delivery of critical components.
Airbus' increased production of the A330neo and potential A220 stretch could further exacerbate supply chain pressures. However, the company remains optimistic about the demand for wide-body jets, hinting at increased production of the A330neo. The potential A220 stretch, if realized, could add capacity to the Canadian-designed model, potentially cannibalizing sales of larger models but expanding Airbus' market reach.
The Boeing strike, while not directly impacting Airbus, has indirectly affected the company's supply chain through its influence on Spirit AeroSystems. As Boeing works to resolve its quality-control issues, the strike has put pressure on Spirit's production, which in turn affects Airbus' supply chain. The long-term impact of these supply chain issues on Airbus' financial performance and market position remains to be seen, but the company is taking steps to address the challenges and maintain its competitiveness in the global aerospace market.
CFM International, a joint venture between GE Aerospace and Safran, has been a bottleneck for Airbus, with engine supply issues persisting since July. Despite some improvement in the third quarter, the company still faces pressure on a year-over-year basis. GE Aerospace CFO Rahul Ghai expects further improvement in the fourth quarter, but the challenges remain a concern for Airbus.
Spirit AeroSystems, a key supplier for both Airbus and Boeing, has also been a source of worry for Airbus. Production rates at the U.S. aerostructures supplier are not meeting Airbus' expectations, leading the company to deploy dozens of workers to affected plants to help stabilize the situation. Reuters reported that Airbus has taken measures, including deploying staff and air-freighting parts, to address concerns over the production of key structural parts for A350 and A220 jets by Spirit AeroSystems.
In response to these challenges, Airbus is taking proactive measures to mitigate the impact on its production and deliveries. The company has agreed to take on two loss-making plants from Spirit AeroSystems, which will help address some of the supply chain issues. Additionally, Airbus is boosting its presence at key suppliers to monitor performance and ensure timely delivery of critical components.
Airbus' increased production of the A330neo and potential A220 stretch could further exacerbate supply chain pressures. However, the company remains optimistic about the demand for wide-body jets, hinting at increased production of the A330neo. The potential A220 stretch, if realized, could add capacity to the Canadian-designed model, potentially cannibalizing sales of larger models but expanding Airbus' market reach.
The Boeing strike, while not directly impacting Airbus, has indirectly affected the company's supply chain through its influence on Spirit AeroSystems. As Boeing works to resolve its quality-control issues, the strike has put pressure on Spirit's production, which in turn affects Airbus' supply chain. The long-term impact of these supply chain issues on Airbus' financial performance and market position remains to be seen, but the company is taking steps to address the challenges and maintain its competitiveness in the global aerospace market.