Salem Radio Network News Saturday, December 4, 2021

Business

Airbus delivery goal boosts stock despite supply snags

By Tim Hepher

PARIS (Reuters) -Europe’s Airbus overcame new snags in its global supply chain to maintain a widely watched forecast for 600 jet deliveries this year, pushing its shares higher despite signs of labour shortages as the economy exits COVID-19 “hibernation”.

The world’s largest planemaker lifted full-year profit and cash targets after profits held up better than expected in the third quarter, and refused to bow to industry critics who have questioned its bullish forecasts for jet production.

Airbus shares opened up around 3%, ignoring a retreat in global stocks after a series of industrial earnings reports served up warnings of supply chain challenges.

Chief Executive Guillaume Faury said the recovery towards pre-crisis output levels was under way after 15 months in which the European group kept its foot on the brake to avoid adding to a glut of aircraft during the airline industry’s worst crisis.

“We observe labour shortages around the world impacting all sectors,” Faury told reporters.

“We are now in the ramp-up and we see all the difficulties of going from a sort of hibernation, and back to business in a world where many commodities and sectors are ramping up again.”

Airbus said it was facing some problems in receiving parts on time, leading to rework on jets and contributing to a recent flattening of deliveries, but said none appeared systemic.

“We think these can be managed in the last months of the year,” Faury said.

Airbus posted a 19% drop in third-quarter operating profit to 666 million euros ($772.7 million) as revenues slipped 6% to 10.518 billion. It said it was looking for full-year operating profit of 4.5 billion euros and free cashflow of 2.5 billion, up from previous targets of 4 billion and 2 billion respectively.

Analysts were on average expecting quarterly operating profit of 623 million euros on revenues of 10.651 billion, according to a company-compiled consensus.

STICKING TO OUTPUT VIEWS

Airbus rounded up its main A320-family production target to 65 a month by summer 2023, slightly later than planned.

In May, Airbus said it was calling on suppliers to secure a firm rate of 64 a month by second-quarter 2023.

Airbus sees a rebound in air travel, especially in the medium-haul A320 category where it competes with Boeing’s 737.

But it is locked in a public and private dispute with suppliers and leasing companies over its ambitions to raise rates as high as 75 a month by 2025.

Engine makers and lessors have protested, saying the proposal risks overheating the market and damaging their own businesses, which depend heavily on the life of older planes.

“We know that there are a lot of views on this but we have our own views, and our own view is that the demand supports rate 75, but we need to look at the supply chain situation,” Faury said.

“We are not yet there but we continue to see a very strong demand in the market and we want to serve that demand moving forward.”

In other programmes, Airbus said it would lift A330 output from two a month to almost three at the end of 2022. It reiterated it would raise output of the newer A350 from five to six a month but delayed this move to early 2023 from autumn 2022.

(Reporting by Tim Hepher;Editing by Sudip Kar-Gupta, Robert Birsel)

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