Airline Orders Airbus Production Glitches Hit New Models

Airbus's new A350-1000 has everything it takes to be a top seller. But the company is having trouble ramping up production to keep up with the demand – largely because suppliers are unable to keep pace.
Signed, sealed, but not yet delivered.

All signs point to Airbus' new A350-1000 becoming a top seller. The manufacturer has already booked 181 orders for the long-haul aircraft before its maiden flight.

The company's American chief operating officer and sales chief, John Leahy, claims the A350-1000 will be miles ahead of its direct competitor, the Boeing 777 ER, in terms of range, comfort and cost.

That could well be the case – if the planes are finished on time.

Airbus is proud of its new range, but the production process is plagued by a series of glitches.

Mr. Leahy, a top salesman who has worked for the European aircraft manufacturer for more than 30 years, has boasted that he can "easily sell 1,000" of the new, longer version A350-1000, as soon as the planes begin to be delivered next year.

But on the eve of the international ILA Berlin Air Show, the main question being asked is not how many more airplanes Airbus can sell, but how many aircraft the company can actually deliver.

Airbus alone has orders currently for €1 trillion on its books. The delivery times for some models reach well into the next decade.

Airbus' performance in recent months has raised questions. In March, the manufacturer shocked customers and investors with the admission that its two most important aircraft programs, the A320 neo and the base versions of the A350, are battling significant production problems. These ranged from defective toilet doors in the Airbus A350 and engine problems with its smaller sister, the A320 neo.

"Production is the top priority for aircraft manufacturers," experts with Roland Berger, a consulting firm, wrote in their latest study. And aircraft manufacturers are ramping up production accordingly. The introduction of new models and strong demand, especially from Asia, have driven Airbus and Boeing to pursue an ambitious growth program that now puts all parties involved under pressure.

Based on list prices, Airbus alone has orders currently for €1 trillion ($1.11 trillion) on its books. The delivery times for some models reach well into the next decade.

In the next three years, Airbus plans to increase production of the A320 from 42 to 60 aircraft a year, while simultaneously introducing new engines. The production of A350 wide-body jets is to be increased to 120 planes a year. By the end of 2014, however, Airbus had only managed to deliver 26.

What has happened with the A350 is something experts had long warned about; namely, suppliers being unable to keep up, especially those supplying the interior finishing.

With its wide fuselage and large windows, the A350, base versions of which will be delivered to Lufthansa from November, is designed to provide passengers with a new feeling of spaciousness on long-haul flights to Asia and North America.

Airbus has even opened a new Customer Definition Center in Hamburg where airlines can choose from dozens of coffee machines, thousands of interior furnishings and 16 million different cabin lighting options.

But French company Zodiac, which supplies both Airbus and Boeing with seats and toilets, has been unable to keep up with the simultaneous production expansion at both Boeing and Airbus. Airbus plans to deliver 50 A350s this year, but it is already the middle of the year and 40 are still in production, partly because of problems with the toilet doors.

The A350-1000 stretch version, touted by Mr. Leahy, will further increase pressure on production and the supply chain next year. "Our biggest problem is that our salespeople could sell even more aircraft if we could offer enough delivery dates," said Airbus's chief operating officer, Tom Williams.

The smaller A320 also has its issues. With its New Engine Option, or neo, Airbus has promised to reduce fuel costs by up to 20 percent per passenger. But at the moment, Mr. Williams said sarcastically, Airbus is primarily producing "gliders" or planes with no engines.

Two dozen A320 neos are parked without engines at the Airbus production plants in Hamburg and Toulouse. The first customer for the aircraft, Qatar Airways, is refusing to take delivery. It is unhappy with the engines supplied by manufacturers Pratt and Whitney. The airline claims the engines need to be left in neutral longer than expected prior to takeoff, to prevent important components from bending, and the software also isn't operating perfectly.

Pratt & Whitney plans to improve the engine. Safran and General Electric are also providing a rival engine. So far only six of the 4,450 Neos on order have been delivered. To make up for the backlog, a fourth assembly line was set up in Hamburg.

The A320 is also being produced in Toulouse, the Chinese city of Tianjin and, as of mid-May, at the company's new plant in Alabama. Airbus chief executive officer Fabrice Brégier, is upbeat."The bet is that we will make up for the delays," he said.

But the problems, and the other glitches in the production cycle, have taken some of the shine off Airbus's new products.

 

Markus Fasse covers the aviation and automobile industry. To contact the author: [email protected]