Airbus sees higher costs on A320Neo delays

Company expects more carriers to order planes that can fly from one end of the Earth to the other


LONDON • Airbus SE expects higher costs from managing deliveries of its A320neo aircraft that have suffered months of delays and seen scores of jets parked without engines amid glitches at both of its engine providers.

The Toulouse, France-based company has spent February and March coming up with a plan to address a new unexpected issue with engines supplied by Pratt & Whitney at the beginning of the year, head of commercial aircraft Guillaume Faury said in an interview.

That’s led to more investment and pressure on working capital as it prepares for as many as 100 so-called “gliders” by the end of this month.

“It’s a challenging situation, that’s very clear,” Faury said on the sidelines of the International Air Transport Association’s AGM in Sydney. “If the engine manufacturers stick to their plans, we will stick to ours or very close.”

The planemaker said at the start of the year that it expects to deliver 800 aircraft this year, but made the forecast before a problem with the knife edge seal component on Pratt’s geared turbo fan engine — one of two options available on the A320neo. The other choice, CFM International’s Leap turbine, is also contributing to the number of aircraft that have been undelivered.

That’s leading to a very backloaded delivery schedule in the second half of the year, Faury said in a separate briefing with reporters. Airbus has had to cover the costs of placing those aircraft in storage and the reorganisation of its production line and supply chain to adjust for the change in schedule.

Airbus is, however, still studying raising the production rates for the A320 to as high as 70 or 75 aircraft a month by 2020, though Faury cautioned that Safran SA, which owns CFM in a joint venture with General Electric Co, has said it won’t lift output until it has a grip on the current issues.

Global airlines are increasingly aiming for ultra-long haul flights and Airbus said it expects more carriers to order planes that can fly from one end of the Earth to the other.

The European planemaker sees demand for between 50 and 100 orders for a longerrange version of the A350 model, capable of flying from Sydney to London nonstop, Airbus’ chief salesman Eric Schulz said in Sydney yesterday.

Airbus and its rival Boeing Co are talking to Qantas Airways Ltd, Australia’s biggest carrier, for a plane that can fly the Sydney-London route without a break, company officials said. Called Project Sunrise, it would put Rio de Janeiro, Cape Town, New York or Paris within direct reach of Australia’s eastern seaboard, according to Qantas. Air New Zealand Ltd could also consider a longer-range version of the A350, Airbus’ Schulz said.

“The heart of that long-range market will continue to be in Asia,” Randy Tinseth, VP of marketing for Boeing commercial, said separately in an interview in Sydney.

The Chicago-based planemaker is still in talks with Qantas about the exact plane that can fly Sydney to London nonstop, Tinseth said. One long-range market with particular potential is Asia-Latin America, he said, adding it’s “hard to say” how many of those aircraft would be sold worldwide beyond Qantas.

A wave of ultra-long flights that will get you halfway around the world in one hop is pushing aircraft manufacturers to come up with planes and engines that can ferry people for 19 and 20 hours nonstop.

This year, Qantas started a Perth to London 17-hour service using a Boeing Co Dreamliner and Singapore Airlines Ltd last month said it’s reviving the Singapore-New York service, a 19-hour flight that will become the world’s longest.

Qantas is “getting very confident” about such long-range flights, the airline’s CEO Alan Joyce told reporters in Sydney.

“The economics are working. Perth-London is making money from day one,” he said.

Once the airline is comfortable with the technical evaluation , it will start the process for getting proposals, Joyce said.

“We’ll do that this year into next year,” Joyce said. “Airbus and Boeing are keeping slots for us so it’s feasible for us to do at that stage. We still have to go through a few hurdles.”

Joyce has challenged both Airbus and Boeing to build a jet by 2022 that can fly 20 hours fully loaded from Sydney to London without a break. Airbus is assessing all options, including reducing seat capacity, adding more fuel cells and modifications to engines, Schulz said.

Joyce has described nonstop flights to New York and London from Australian cities such as Sydney and Melbourne as the “last frontier” of aviation, after which all of the world’s major cities will have non-stop air links. Options for making such long flights more bearable would include introducing a new four-class structure, with part of the cargo hold utilised for sleeping berths, Joyce has said.

The airline’s first Perth-London flight started in March, signalling the beginning of the end of the so-called Kangaroo Route, which has seen planes make the journey from Europe to Australia in a series of hops since the advent of aviation.