Airbus lowers outlook as supply chain snags continue to bite

Airbus cut its earnings and aircraft delivery goals for the year as persistent supply chain issues continue to deprive the European plane maker of vital components, dealing a setback to the company at a time when demand for its jets is at a record.

The company now expects to hand over 770 aircraft in 2024, down from a previous goal of 800, it said in a surprise announcement after European markets closed on June 24. Speaking on a call with reporters, chief executive Guillaume Faury said the situation is not getting any better, requiring the company to adjust its goals.

Airbus has long warned of supply chain issues and a lack of skilled workers, after the pandemic first grounded the global aviation industry and then left it unprepared once air travel came roaring back.

Demand for its aircraft has been particularly strong in the last two years as airlines clamour for modern models, further exacerbating the shortfall in required equipment and labour.

Jet engine supplies in particular have recently emerged as a bottleneck that contributed to Airbus lowering its outlook, Mr Faury said.

“That is a new situation that we were not expecting,” Mr Faury said on a separate call with analysts.

The European plane maker now expects adjusted earnings before interest and tax of €5.5 billion (S$8 billion) in 2024, down from a previous goal of as much as €7 billion.

The company also cut its outlook for free cash flow before customer financing to about €3.5 billion.