Airbus lowers 2024 guidance amid A320/A321 supply chain and space system challenges

Bjorn Fehrm

June 24, 2024, © Leeham News: Airbus issued a press release today where it lowered guidance for 2024.

The release highlighted two areas as the drivers for the update:

  • Larger-than-expected supply chain issues for the single-aisle segment (A320/A321), where delivery ramp problems in engines, aerostructures, and cabin equipment mean that the guidance for 2024 goes from 800 aircraft in total to 770. Because of this, the ramp to 75 A320/A321 deliveries per month has been moved out a year to 2027 instead of as previously forecasted 2026.
  • The Defence and Space Systems management has, after an extensive review, found schedule, workload, and sourcing challenges for certain Space telecommunications, navigation, and observation programs. Airbus has decided to record charges of around € 0.9bn in the H1 2024 report to cover the problems in these programs.

As a result, Airbus has decided to update the 2024 guidance ahead of its 1H2024 results release, which is on 30 July:

  • Around 770 commercial aircraft deliveries (was 800).
  • EBIT Adjusted of around € 5.5 billion (was €6.5bn to €7bn).
  • Free Cash Flow before Customer Financing of around € 3.5 billion (was € 4bn).

Airbus adds the usual caveats to the guidance:
The Company assumes no additional disruptions to the world economy, air traffic, the supply chain, the Company’s internal operations, and its ability to deliver products and services. The Company’s 2024 guidance is before M&A.

Bjorn’s Corner: New engine development. Part 12. Speed change.

By Bjorn Fehrm

June 21, 2024, ©. Leeham News: We do an article series about engine development. The aim is to understand why engine development now has longer timelines than airframe development and carries larger risks of product maturity problems.

To understand why engine development has become a challenging task, we need to understand engine fundamentals and the technologies used for these fundamentals.

After covering the main thrust-generating device, which we can call a propeller, fan, or open rotor, depending on the application, we now look at the core, which provides the power to the thrust device. And there, we look at how we use the properties of the air as a gas to get it into a state that the gas turbine needs for different sections.

Figure 1. The gas turbine cycle. Source: Rolls-Royce: The Jet Engine.

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Bjorn’s Corner: New engine development. Part 10. Propeller, Rotor or Fan?

By Bjorn Fehrm

June 7, 2024, ©. Leeham News: We do an article series about engine development. The aim is to understand why engine development now has longer timelines than airframe development and carries larger risks of product maturity problems.

To understand why engine development has become a challenging task, we need to understand engine fundamentals and the technologies used for these fundamentals.

Following the last Corner on airframe integration, several comments were made about the definition of propeller, open rotor, and/or fan. So, we’ll explore this further.

Figure 1. Evolution of Wright Brothers propellers from 1903 to 1905. Source: wright-brothers.org

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The all-important cabin. Part 2

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By Bjorn Fehrm

May 30, 2024, © Leeham News: We will do an article series about the all-important cabin and its seating for an airliner. The cabin layout and its comfort are the most important part of an airliner for the passenger. For an airline it’s its face to the customer.

We will look at the different types of cabins used and how these use the airliner’s real estate, what the cost is, and what the weight is. With the weight, we can also predict how different cabins affect the aircraft’s performance.

Summary:
  • The configuration of the cabin has a large influence on total seating, weight, and cost.
  • The relationships change up to 500%.

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Bjorn’s Corner: New engine development. Part 9. The role of the Nacelle

By Bjorn Fehrm

May 24, 2024, ©. Leeham News: We do an article series about engine development. The aim is to understand why engine development now has longer timelines than airframe development and carries larger risks of product maturity problems.

To understand why engine development has become a challenging task, we need to understand engine fundamentals and the technologies used for these fundamentals.

In the last Corner, we looked at why Open-Rotor engines have two fan stages, either both rotating in different directions or one rotating followed by a de-swirling stator stage. Now we study the flow field ahead of and around the fans to understand the role of the nacelle and the open rotor spinner.

Figure 1. A graphic showing the different parts of a Pratt & Whitney PW1100G nacelle. Source: Pratt & Whitney.

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Bjorn’s Corner: New engine development. Part 6. Open Rotor

By Bjorn Fehrm

May 3, 2024, ©. Leeham News: We do an article series about engine development. The aim is to understand why engine development now has longer timelines than airframe development and carries larger risks of product maturity problems.

To understand why engine development has become a challenging task, we need to understand engine fundamentals and the technologies used for these fundamentals.

We have in previous Corners discussed geared versus direct-drive turbofans. Now the time has come to discuss Open Rotor engines.

Figure 1. The GE 36 Open Rotor engine, the father to today’s CFM RISE. Source: GE Aviation.

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Bjorn’s Corner: New engine development. Part 4. Propulsive efficiency

By Bjorn Fehrm

April 19, 2024, ©. Leeham News: We have started an article series about engine development. The aim is to understand why engine development now dominates new airliner development when it comes to the needed calendar time for development and the risks involved.

To understand why engine development has become challenging, we need to understand engine fundamentals and the technologies used to achieve them. Last week, we discussed propulsive efficiency and learned that it depends on the Overspeed the engine gives its exhaust air-gas mix.

We then used two direct-drive engines from CFM (CFM56 for the 737 ng and LEAP for the 737 MAX) to give us examples of Overspeeds and their corresponding Propulsive efficiency. Now, we look at geared turbofans.

Figure 1. One of the first geared turbofans (if not the first), the Turbomeca Aubisque used on the SAAB 105 jet trainer. Source: Swedish Military Airplane History.

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Bjorn’s Corner: New engine development. Part 3. Propulsive efficiency

By Bjorn Fehrm

April 12, 2024, ©. Leeham News: We have started an article series about engine development. The aim is to understand why engine development now dominates the new airliner development calendar time and the risks involved.

To understand why engine development has become a challenging task, we need to understand engine fundamentals and the technologies used for these fundamentals. We started last week with thrust generation, now we develop this to propulsive efficiency.

Figure 1. The base engine in our propulsive efficiency discussion, the CFM56-7 for the Boeing 737ng. Source: CFM.

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Bjorn’s Corner: New aircraft technologies. Part 51. Wrap up

By Bjorn Fehrm

March 22, 2024, ©. Leeham News: Last week we did the first part of the Wrap-up of our 50 article series about the New Aircraft Technologies that can be used when replacing our present single-aisle airliners.

Now, we summarize the last 25 articles in the series, which covered how to develop, produce, and support a new airliner.

Figure 1. The Program Plan for a new airliner. Source: Leeham Co.

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Quality Will Drive Pay for Spirit Executives

By Dan Catchpole

Feb. 6, 2024 © Leeham News: Quality more than quantity will drive Spirit Aerosystems executives’ compensation when the company unveils its new formula when it files its proxy statement in March, the company’s CEO Pat Shanahan told Wall Street analysts on Tuesday.

“It will be significantly different, and the heaviest weighting will be only quality,” he said during a conference call discussing Spirit’s fourth quarter earnings report.

The panel blowout on Alaska Airlines Flight 1282 last month highlighted ongoing quality problems at Spirit and Boeing. Unlike the violent decompression on the 737 MAX 9, the quality problems typically just create financial headaches and public embarrassment for the two companies.

Spirit recorded $59M in net income, 48 cents adjusted earnings per share, and $42M free cash flow in the fourth quarter of 2023, its first profitable quarter since the beginning of 2022.

The company’s performance was boosted by a contract renegotiation and financing deal signed with Boeing in October. Spirit is getting close to signing a similar deal with Airbus, Shanahan said.

Summary

  • Quality metrics for exec compensation
  • Short term, long term plans for improving quality
  • Negotiations with Airbus

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