Airbus faces engine delays but reaffirms jet delivery targets

By Tim Hepher

PARIS (Reuters) -European planemaker Airbus on Wednesday revealed a growing queue of aircraft waiting for engines before they can be delivered to airlines, but reaffirmed its delivery goals for the year after securing promises over supplies from engine makers.

The world's largest planemaker said it had 60 so-called "gliders" or otherwise complete airframes sitting outside its factories, up from an estimate of 40 last month, but reaffirmed the target for a 7% rise in annual deliveries to 820 jets.

"It won't be a walk in the park; it will be more back-loaded than we would like," CEO Guillaume Faury told analysts, adding that engine makers had agreed to support the delivery target.

Airbus has faced fluctuating supplies from its largest supplier CFM International, co-owned by GE Aerospace and Safran, but delays have spread to its RTX-owned rival Pratt & Whitney in the wake of a recent strike, Airbus said.

Although the gap in Pratt engine supplies for Airbus is new, the lion's share of delays remain with CFM, it told analysts.

The engine makers did not respond immediately to requests for comment.

Despite struggling to find enough engines to prevent a 5% drop in deliveries in the first half, analysts say Airbus is continuing to produce narrow-body jets at close to pre-COVID levels to avoid injecting new volatility into supply chains.

But the higher industrial pace has meant building up extra inventory and Airbus data showed it had burned through 1 billion euros ($1.14 billion) more cash than the market expected in the second quarter, while keeping its financial targets for the year intact.

However, it posted a higher-than-expected second-quarter profit, boosted by its defence and helicopter businesses.

A330NEO OUTPUT HIKE

Airbus, which also makes satellites, fighters and civil and military helicopters, said its widely watched adjusted operating profit almost doubled to 1.58 billion euros as revenues remained broadly flat at 16.07 billion euros.

A strong increase in profit had been widely expected after Airbus took a hefty charge on its space business a year ago, but the results slightly beat forecasts in Defence and Space, the company's second-largest division, as well as Helicopters.

Analysts were on average expecting adjusted operating income of 1.47 billion euros on revenues of 15.78 billion euros in the second quarter, according to a company-compiled consensus.

Airbus announced plans to raise production for its A330neo jet to five a month in 2029, from four now, to meet rising wide-body demand, while keeping other production targets unchanged.

Faury hailed a weekend agreement to keep aircraft and parts out of U.S. tariffs imposed on Europe under an EU-U.S. trade deal as a "welcome development for our industry".

Airbus said it expected a deal to acquire assets from struggling parts supplier Spirit AeroSystems, which is being divided up between Airbus and its U.S. rival Boeing, to close in the fourth quarter, months later than originally expected.

Both Airbus and Boeing have had to advance cash to their mutual supplier while the rare transaction awaits regulatory approval, though this is yet to have a major financial impact.

Spirit makes wings for Airbus' smallest jet, the A220, at a factory in Belfast, Northern Ireland. Airbus is expected to absorb this activity as well as a plant in North Carolina that makes a key section of the A350 when the deal is completed.

Airbus said it was working to head off a potential strike at a much larger wings factory in Wales and reaffirmed plans to inaugurate a second A320-family assembly line at Tianjin in China before the end of this year, with output to start in 2026.

($1 = 0.8721 euros)

(Reporting by Tim Hepher; Additional reporting by Rajesh Kumar Singh in Chicago; Editing by Benoit Van Overstraeten and Jamie Freed)