Thursday, June 16, 2016

AIRBUS NEEDS THE NEW SUPPLY CHAIN

New Airbus Airliner Facing Delays at Critical Time

Airbus has pushed back delivery of its new A350-1000 long-range planes at a time when customers are already getting restless


An attendee takes a photograph of an Airbus A350-1000 aircraft at the Singapore Airshow in February 2016. Airbus had previously promised the first of its new long-range planes would be handed over in the middle of 2016, but has now rowed back. ENLARGE
An attendee takes a photograph of an Airbus A350-1000 aircraft at the Singapore Airshow in February 2016. Airbus had previously promised the first of its new long-range planes would be handed over in the middle of 2016, but has now rowed back. Photo: Bloomberg News
LONDON—Delays are creeping into one of Airbus EADSY -3.04 % Group SE’s newest airliner programs at a time the European plane maker is already struggling to deliver on promises made to customers.
Airbus has shifted delivery of the first of its new A350-1000 long-range planes to the second half of next year, having previously promised a midyear handover. The delays have hit the program even before the first plane begins flight trials, during which aircraft projects often encounter holdups.
The first test flight, once planned for around the middle of this year, isn't now due until after September.
“We have adapted the A350-100 schedule to ensure we fully satisfy our customers’ requirements for a mature aircraft from day one,” Airbus said Wednesday.
The move could further raise tensions with Qatar Airways which is already at loggerheads with Airbus over other aircraft models that Airbus hasn’t delivered on time. The Doha-based growth carrier is the biggest customer for the plane, with orders for 37 units, and is due to be its launch operator next year.
Qatar Airways’s outspoken chief executive Akbar Al-Baker this month said “they have to deliver the airplane contractually in June to me.”
Mr. Al Baker recently canceled an order for its first Airbus A320neo single-aisle plane, citing engine problems that led to protracted delays. The plane maker has said it is working to fix the situation for future deliveries.
Airbus said it is “putting appropriate resources in place” to achieve A350-1000 milestones. The first customer aircraft is already well into production, the plane maker said, though final assembly, one of the last stages, hasn't started.
The A350-1000 is Airbus’s largest twin-engine long-range plane, which typically is expected to seat 366 passengers and fly more than 9,000 miles. The first three test planes are currently in the final assembly stage in Toulouse, France.
Airbus has a lot riding on the A350-1000, which had secured 181 orders from 10 customers through May, including United Continental Holdings UAL -1.80 % and British Airways. ICAGY -2.77 % The plane is aimed at curbing the dominance Boeing Co. BA -1.30 % , the world’s largest plane maker, has enjoyed in the large widebody market with its popular 777-300ER model. Boeing plans to introduce a successor, the 777X, toward the end of the decade. The Chicago-based plane maker has secured 306 orders for the new model.
The A350-1000 is a larger version of the 325-seat long-haul plane already in service. Qatar Airways was the first airline to commercially operate the plane, called the A350-900, putting it into service last year. Mr. Al Baker has expressed frustration, though, at the fact that Airbus has been late this year in delivering more of those planes.
        
Both Boeing and Airbus have, at times, suffered delays in their multibillion-dollar plane development and production efforts. Airbus stumbled in building the A380 superjumbo, causing costs to skyrocket. Boeing’s work on the 787 Dreamliner ran years late. The company has made a loss on each of the jets; the accumulated shortfall, which Boeing calls “deferred production cost”, had reached $28.7 billion at the end of March.
By comparison, the A350 program had gone relatively smoothly, with only small delays to the original development program. Even the latest schedule change is relatively small compared with some other programs.
The biggest near-term challenge for Airbus has become getting A350s completed to deliver them to customers. The plane maker said it would deliver at least 50 A350s this year, with only nine handed over through May. Airbus said supplier bottlenecks have hampered output. It confirmed its plan to meet this year’s delivery target Wednesday and said goals for 2017 would be given in January.
French supplier Zodiac Aerospace ZODFY 21.15 % Tuesday said it was still struggling to meet commitments for lavatories for installation on Airbus’s A350 airliner. Zodiac chief executive Olivier Zarrouati said tighter controls have improved quality on the items, though slowed shipments. “The delivery rate isn't what it should be yet,” he told analysts.
Supplier issues are also hampering other aircraft deliveries. Airbus delivered 234 planes in the first five months of the year or little more than a third of its full-year commitment to hand over 650 or more aircraft. Company officials acknowledge meeting the target will be a challenge and likely to go down to the wire.

Write to Robert Wall at robert.wall@wsj.com

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