Airbus and Boeing stick with plans for increased output

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Airbus and Boeing stuck with plans to increase output of their bestselling jets amid buoyant demand from airlines despite persistent supply chain problems that have hampered production.

The world’s two largest aircraft makers on Wednesday said strong demand for commercial aircraft had driven revenues and earnings in the first six months of the year.

Boeing and Airbus are both taking orders to deliver planes late in the decade as airlines seek to expand fleets as well as replace older aircraft with more fuel-efficient models. Yet supply chain challenges stemming from the Covid-19 pandemic have persisted.

Guillaume Faury, Airbus chief executive, reaffirmed the European company’s target to deliver about 720 aircraft by the end of this year as well as to raise output of its best-selling A320 family of jets.

The manufacturer said adjusted earnings before interest and tax had risen 34 per cent to €1.85bn in the second quarter, while revenues increased 24 per cent to €15.9bn, driven by higher aircraft deliveries.

Faury said domestic air traffic had recovered and was “even exceeding” pre-pandemic levels. International air traffic, he said, was “close to or even above” levels last seen in 2019 in most regions.

The company said output of its best-selling A320 family of jets was “progressing well” towards its previously announced rate of 75 aircraft per month in 2026, adding that it would make “tactical adjustments” to production planning as required to meet the target rate. Faury insisted the company had not withdrawn a previous interim target to reach 65 jets but was focused on hitting its rate of 75.

He said challenges and bottlenecks were continuing to impact the supply chain. “We see a rather complex situation that remains challenging with a number of critical suppliers,” he said.

Airbus is working with enginemaker Pratt & Whitney on problems affecting its latest-generation GTF engine which powers some of its A320neo family of jets.

Pratt’s owner RTX on Tuesday said a “rare condition” in powdered metal meant 1,200 of more than 3,000 engines built for the A320neo between 2015 and 2021 would have to be recalled and inspected for micro cracks.

Airbus does not expect disruption to aircraft deliveries in 2023, Faury said, while adding that there could be indirect consequences later on from the amount of extra work RTX would have to do as part of the extra maintenance.

“It will be a lot of work for P&W . . . There might be indirect consequences,” he said.

Arch-rival Boeing, meanwhile, reported a net loss of $149mn in the second quarter, aided by commercial jet deliveries and earnings from maintaining aircraft, but hampered by costs.

The US company’s revenue grew 18 per cent to nearly $20bn as it delivered 136 commercial jets between April and June amid high demand from airlines and lessors.

But “abnormal costs” dragged on Boeing and it reported a $383mn operating loss.

TD Cowen analyst Cai von Rumohr said the company was probably referring to costs from fittings improperly installed into the fuselage of the 737 Max by supplier Spirit AeroSystems, as well as quality problems with the fuel tank for the 767 freighter.

Boeing’s space and defence business also reported a loss, of $527mn. The company reported charges on fixed-price defence programmes totalling $514mn.

But the loss at the company overall was smaller than Wall Street expected — an adjusted loss of 82 cents per share, rather than 89 cents.

Chief executive David Calhoun called it a “solid” quarter, with Boeing “remaining on the right path to restoring our operational and financial strength”.

Boeing said it would begin building 38 737 Maxes a month, up from 31. It is now making four 787 Dreamliners a month and plans to hit a rate of five by the end of the year.

Calhoun stressed that, despite the demand, the manufacturer would not build 737s faster than 50 a month.

While the market exists to build 60 Maxes a month, Calhoun said, the company needed to focus on execution.

“It’s not a simple thing to do, and I don’t want us to get ahead of ourselves,” he said.