Pontification: A320 production challenges may extend to 2022/23

By Scott Hamilton

  • Update of Boeing 737 NG Pickle Fork cracking issues.

Dec. 2, 2019, © Leeham News: Airbus sees struggles for A320 production continuing throughout next year, into 2021 and spilling into 2022/23 as the Air Space cabin is introduced on the A321XLR.

Executives also see lower margins than the target 15% for the A350 and losses on the A220 continuing into the middle of the next decade.

Even so, profit targets are expected to be met and officials still want to ramp up production rates on the A320.

This mixed picture was presented by Airbus CFO Dominik Asam during  series of investors meetings last month in Asia, arranged by Citi Research’s London office.

In a research note issued Nov. 22, Citi summarized the three days of meetings with investors in Australia, New Zealand and Tokyo.

Struggling A320 production

Airbus has been running up to six months behind on A320 deliveries this year—one of the reasons cited by British Airways parent IAG when it signed a letter of intent to acquire up to 200 737 MAX airplanes, announced at June’s Farnborough Air Show.

The Airbus Cabin Flex (ACF) and customer customization introduced a complexity on the narrow-body production lines that is new and foreign to workers. Customization is common on wide-body products, but single-aisle airplanes tend to be more standardized.

The ACF on the A321LR/XLR, with missions up to nine hours, allows airlines to customize their cabins to international passenger experience.

“ACF is a new interior for the A321 that allows much more customization than before, offering narrow body customers a level of options typically only previously seen on wide body aircraft, such as lie-flat beds in business class. Although this sounds simple, the changes can allow the movement or elimination of emergency exits due to lower occupancy, as well as having very different wiring considerations. The Final Assembly work content is about 30% higher for the ACF than for standard interiors,” writes Citi Research.

“This extra level of complexity was more difficult to incorporate into the production line than originally envisaged,” the report says.

Ramping up ACF production is slower than Airbus predicted, Citi reported from its investors meetings. “Airbus produced 12 ACF in 2018, 50 in the first nine months of 2019 and are targeting over 50 in Q4 2019, with over 200 in 2020,” Citi wrote.

The fourth quarter goal seems aggressive, but Airbus has a history of pulling a rabbit out of its hat to meet fourth quarter and year-end delivery targets.

What’s important to note is the target for 200 ACF-configured cabins next year. This would be between 27% and 30% of the deliveries next year, providing an important advantage over the 737-10 MAX as Boeing tries to recover from the grounding crisis.

Recovery, then more complexity

Airbus’ Asam told investors that the ACF recovery should be achieved in 2021. But, then Airbus introduces the Air Space cabin into production in 2021/22, adding a new round of complexity. The A321XLR entry into service is targeted for 2023, with yet one more round of complexity.

Despite these challenges, Airbus still wants to boost production rates. As always, the supply chain—notably the engine makers—are the driving force. The production rate is currently 60/mo (times 11 ½ months). Airbus wants to go to 63/mo in 2021. Production is sold out to 2024 at current rates, with slots also filled beyond.

A350 margin

The A350 is sold out through 2021. After this, Asam told Citi’s investors that pricing pressure from the Boeing 787 could drive the A350 profit margin below the targeted 15%. Boeing is under pressure with a weak 787 skyline (also from 2022) and it is offering discounts on the 787 as part of the compensation to MAX customers who might be enticed to swap some MAX orders for the 787.

“Although not a position considered likely, Airbus would be ultimately prepared to price down to variable cash cost of production,” Citi wrote.

A220 losses

The A220 is forecast to remain in a loss position until the mid-2020 decade—or until Montreal’s production line reaches 10/mo and the new Mobile (AL) hits 4/mo. Losses up to 350m in each of the next two years will be covered by Bombardier.

Update on 737 NG Pickle Fork

Ishka, the UK-based consulting and conference company, last week published an update of the Boeing 737 NG pickle fork cracking issue that’s grounded about 50 airplanes worldwide.

Ishka’s concluding remarks were below.

With around half of the aircraft covered by the FAA’s AD already inspected and an incidence rate of around 5%, the ‘pickle fork’ issue is a costly annoyance for NG operators, but it is still far from the pervasiveness initially feared. For comparison, the 40 to 50 787s simultaneously grounded over Rolls-Royce Trent 1000 issues at various points throughout 2019 represented around 11% to 15% of all Trent 1000-powered 787s in service.

Nevertheless, Ishka finds two concerning factors in the ‘pickle forks’ saga: some aircraft below 22,600 cycles have developed fatigue cracks (at least two at Lion Air) and the AD has lasting effects – aircraft will need to be checked periodically at intervals not exceeding 3,500 cycles. This means more 737 NGs could be found to be affected beyond the mid-2020 deadline for ongoing inspections. On 12th November, South Korean newspaper The Hankyoreh reported that the Ministry of Land, Infrastructure, and Transport had discovered cracks in a further four aircraft: two from Jeju Air and two from Eastar Jet – Ishka was unable to identify these four aircraft and they were not included in this analysis.

Ishka’s analysis points to higher rates among certain production blocks (based on production line numbers), but despite the apparent higher concentration, it is too early to conclude that sub-fleets related to affected aircraft could also be impacted. For instance, following initial reports on cracks on ex-Jet Airways aircraft due for cargo conversion for Amazon, inspections mandated by India’s aviation authority, the DGCA, showed no further ex-Jet Airways NGs affected among those still operating in India.

 

41 Comments on “Pontification: A320 production challenges may extend to 2022/23

  1. Although not a position considered likely, Airbus would be ultimately prepared to price down to variable cash cost of production,” Citi wrote

    If there was a message of intent then that is it. It appears Airbus are gearing up for a slugfest on the back of declining orders in the future and the need to fill slots across the industry.

  2. Never heard of ACF but that doesn’t mean much. Some things are so compartmentalized, it is quite funny.

    AirSpace could be a real fun experience, that in an extremely ironic manner. our Company is one of the suppliers of AirSpace monuments. I am no longer invloved in the Project but I do remember at that time of the bid, the schedule was extremely tight, Airbus kept delaying the decision on who gets to supply the monuments (at least 3 months, if not longer) without ANY push to the right on the development/production schedule. Of course Airbus will be flogging our Company for any delays, for which they would be partially responsible.

    If all other bids for major AirSpace packages were similarly carried out, I can imagine quite a show for the first delivery.

    • Advanced Cabin Flex. AIB removed the #2 door on the A321 and replaced it with 2x overwing exits.

      Gives a larger space to the forward cabin where business class and extra-legroom or economy+ cabins would be.

      • I think the space gained without door pair 2 is a wash, because each overwing exit needs space too.
        Door pairs 1 and 4 are type B exits and together count for 150 seats.
        Both overwing pairs are type III exits and count together for 65 seats.
        Door pair 3 counts for 5 seats (FAA) and 35 seats (EASA),
        but if it would reach to the floor (type C) it would count for 55 seats (future 270 seats A322).
        Space can be gained because in most cases door pair 3 is not needed till 215 pax.

  3. I do find it disturbing that pickle fork cracks have been found in lower cycle aircraft but there does not seem to be any guidance to expand the inspection to aircraft with lower cycles.

    Have I missed something?

    I hope so, I would hate to believe that this is being ignored or swept under the rug.

    • Scott posted a link to some good analysis of the pickle fork issue:
      https://www.ishkaglobal.com/News/Article/6088/Shared-patterns-An-analysis-of-737s-grounded-over-pickle-forks

      I’m interested in any more information on just how the cracks are being addressed on the affected airframes.

      Are the pickle forks being replaced, or are they being braced, re-inforced, … ? Just what is the ‘fix’, and after the ‘fix’ when do the ‘fixed’ pickle forks need inspection again ?

      Also how long does it take on average to ‘fix’ an aircraft affected by cracked pickle forks ?

        • http://www.b737.org.uk/picklefork.htm
          For some detailed referenced info with good pictures
          Boeing says its repair station at Victorville should take 2 -3 weeks per plane.
          Dont know what the repair is yet
          “This AD also requires repair of all cracking using a method approved by the FAA or The Boeing Company Organization Designation Authorization (ODA).

          As it seems only rear wing spar pickle forks are being affected , Im making a prediction that the wing speed brakes are connected to this problem as apparently use of them is the highest wing loading case.

  4. 5% might be less than the 11% on the 787s, but in absolute numbers it’s still many more. Comparing percentages is not useful here.

    • It is useful in the sense that an airline having to adjust schedules for a 5% reduction in line-ready aircraft within a specific subfleet is likely easier than an 11% cut. Of course other factors get in the matrix, but as a blunt measure of how the impacts differ, that is roughly why.

  5. A320 delivery guidance for 2019 is now down to 860 aircraft instead of foreseen 880-890. In 2018 delivered were a record 800 aircraft. Perspective is all.

    It seems A are stronger then ever before, in terms of backlog, deliveries, portfolio, competition, resources, options. Instead of bragging, they keep low and tactically communicate on various challenges.

    • A320 delivery should be Airbus deliveries. A320 deliveries were 626, of which 240 CEO’s. For 2019, 660 ? despite the production issues?

  6. It will be interesting to see what next year’s delivery guidance is. Anywhere between 900 and 940. They will be preciously close to a 1000 in 2021.

    Sometime in 2021 Airbus get’s the A380 hall together with a very experienced workforce. I sure they are already manufacturing the tools ready to install in the hall. So for me, 70 A320/A321 a month by end of 2023, the majority A321.

    The widebody fight ’til death will be a spectaclear to watch.

    • Well for better or worse, engines and such don’t get the hall and have to both ramp up to meet the demand and maintain quality control.

      Which would you prefer?

      Well and engines for Boeing’s new 737RS

    • “” The widebody fight ’til death will be a spectaclear to watch. “”

      It should be thought about making Single Aisle Aircraft wider. The 767 was kind of not economical with a second aisle for only one seat more per row.

      A 7-abreast 767 with 32in seat pitch would be equal in pax to a 8-abreast Single Aisle with 36.6in seat pitch.
      A Single Aisle Aircraft with 8-abreast seating with 37.3in seat pitch is equal in pax to a 6-abreast with 28in seat pitch.
      If regulations would ask for 35in seat pitch with a 8-abreast Single Aisle it would be a win for airlines and more comfortable for passengers.

      • Maximum 3 seat from the aisles allowed.

        Still, the idea of the MS21 appears to be a good solution, especially on longer flights and for longer fuselages – make the aisle a bit wider to allow passenger to pass each other or a trolley. Maybe that’s what Boeing is planing to do with the FSA.

        • Yes, 3 seats only allowed, but what is the intention behind it, you won’t be slower on a 4th seat if you have 7in more seat pitch.

          If a type III exit were on each row, all type III exits together would only count for 70 seats. Some regulations don’t make much sense.

          You won’t lower safety with a 4th seat, but would gain much. Nobody would complain about comfort.

        • “Maximum 3 seat from the aisles allowed.”

          I think this also has to do with Flight Attendants being able to reach all passengers from the aisle itself.

          • That’s a good reason and makes sense.
            Flight Attendants need to assist using oxygen masks.

  7. LNA: “Customization is common on wide-body products, but single-aisle airplanes tend to be more standardized.”

    In the early 60’s Douglas Aircraft were already offering a panoply of customized interiors to their DC-9 clients and that gave them chronic production headaches which turned out to be extremely costly for the company and slowed down production at unbearable levels at a time aviation was expanding fiercely. That is what precipitated Douglas into bankruptcy a few years later. This lesson was lost on Airbus apparently.

    • Even more serious of lesson was lost at Boeing is how to handle the 737MAX crisis. Amazing to see that history of DC10 is repeating …

      • Boeing handled the 787 Dreamliner crisis remarkably well but unfortunately today the way they are handling the MAX crisis is similar to the way their engineers designed the MAX. That is to say it is miserably inadequate.

        • The GFC worked to reduce pressure to deliver rather well. The delays matched up with customers wanting to defer ( mostly by switching to 789 for holding onto early bargain pricing.)

          One could even float some theory that it was “planned into” the Dreamliner project. GFC was mandatory, open was the timing. gobble up all orders and see Airbus foundering. 🙂

          What they definitely did not realize is that they worked in a cargo cult environment.

      • Ramping up DC-9 production , which suddenly became a runaway hit was part of it. In those days the relatively steady production sold out years ahead wasnt yet a thing. They had to buy out the Canadian plant who made the wing too.

        • Post WWII there were two other mfgs making B-52 as the Air Force wanted the big bomber in big number and they wanted it NOW!

          They kind of missed it was a really big bomb and you did not need to level a city to hit a factory (well let me rephrase that, you did not need 1000 bombers worth of small conventional bombs to get the factory, an A bomb of course is going to remove the rest of the city )

          • Only Boeing built the B-52 , initially at Seattle, and then as B-47 production finished, at Boeing Wichita as well.
            You may have been thinking of the B-47 final production which was also done by Douglas at Tulsa OK and Lockheed at Marietta GA.
            Apparently the B-47 wing roots needed fatigue repairs on ‘milk bottle shaped’ connecting pins , reminds me in a small way of the ‘737 pickle forks’

    • Customization of the A321XLR is a serious challenge. Regarding interiors, turning a short haul NB into a 4000NM aircraft, requires significant new catalogue options. More bigger lavatories, inseat entertainment (system, wiring, airco), bigger more demanding galleys (ovens, fridges), cockpit / crew rests etc. next to bigger fuel tanks, wing modification, 101t beef-up. This is not another A321. It’s a major upgrade, probably clearing the way for new programs.

      https://groups.google.com/group/aviation_innovation/attach/55a593b17ca7b/A322.jpg?part=0.1&view=1&authuser=0

      • Sounds like a good use for the A380 hall.

        Shift all the new stuff over there and not impede the current lines.

        • Having been given a personal tour I can assure you that they will not be short of headroom, when I was there they were reworking two A359s on the empty side of final assembly and they looked like toys in a very empty lounge

      • The A380 facility could be ideal for a dedicated A321XLR assembly line and a hypothetical A322 to follow?

    • The difference between Douglas back then and Airbus today is that Airbus are successfully delivering hundreds of aircraft a year. Also their only competition, Boeing, can’t deliver so much as a coffee maker if it’s intended to go in a MAX.

      Manufacturing complexity these days is easier to manage; complete computerisation of the BOM means it’s possible to know what the exact delivery schedule needs to be. Part 2 is achieving that schedule, which is the tricky part… Companies like Toyota are past masters at managing complexity and production efficiency, so it can be done.

    • A far more recent example of the costs of customisation was the A380 which led to a much reduced scope on the A330

    • “This lesson was lost on Airbus apparently.”

      I don’t think so.
      Airbus has done that lesson on the A380 already. They must have grokked something. Even if the path now appears stony.
      What advantage does mastery bring? Pricing power?

  8. Thing to note is that cracks were “discovered @ nn cycles” only. Nobody knows how long they existed already, at what cycle numbers they began to appear for each frame.

    What is known about the fault progressing to heavier damage ( up to some catastrophic outcome) ?

    Looks like “times of grace” are rather long? Good Thing (TM) 🙂

  9. A321
    Doors 1LR are 5.04m from the nose on ACF, but 5,02m without ACF.
    Doors 4LR are 36.47m from the nose on ACF, but 36.58m without ACF.
    Why do they need these different versions?

    If so little ACF were ordered, it seems ACF might not be cheap and for most airlines 220 seats without ACF might be enough.

  10. On a side note:
    What purpose has the second “LN over aircraft age” graph?
    ( IMU it only shows that some LN are out of (regular) order )
    A more conducive graph would have straddled LN to Date/Age data.

    Really of interest is the _production date_ of the fuselage and not delivery of the aircraft. ( I’d assume that wingbox, pitchforks and fuselage are a “one piece” delivery from Spirit Aero. Q: who does the P8 fuselages? Spririt too? Are they different?)

    • The A350-900 was originally intended to replace the A340-300 and to compete with the B777-200ER. For airlines that want to give their passengers the 772ER experience with considerably less fuel burn, the A359 is a better choice than the A339. For long routes, such as JFK or EWR to HKG, the only choices are the A359 or the B789. The A339 is a great airplane, but it doesn’t have the range of the A359 or the B789.

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