Airbus Faces Supply Chain Challenges

By Tim Hepher and Allison Lampert

PARIS/MONTREAL (Reuters) – Airbus is dealing with supply concerns over crucial structural parts for its jets, particularly from Spirit AeroSystems (NYSE: SPR). This issue contributes to a series of supply chain difficulties affecting delivery growth, according to various industry sources.

Airlines may experience delays in receiving certain jets, including the long-range A350, next year due to extended lead times for components. To address these issues, Airbus is allocating additional resources to maintain delivery schedules.

Recent data indicated that Airbus must increase deliveries by 11% in Q4 to meet its annual target of 770 jets. However, some analysts have adjusted their estimates to around 750 or 760 planes.

While Spirit predominantly supplies Boeing (NYSE: BA) — which is in the process of reacquiring its subsidiary — Airbus also depends on Spirit for significant parts for the A350 and A220 models.

Sources, who requested anonymity, highlighted concerns related to the manufacturing of fuselage components in Spirit's Kinston, North Carolina, facility. In addition, Airbus has expedited the delivery of A220 wings by airlifting components from Spirit's Belfast facility in Northern Ireland.

In July, Airbus took over two unprofitable plants following Boeing's decision to buy back Spirit amid a growing industrial crisis after a door plug incident during mid-air.

Despite claims from Spirit that production is on schedule, an industry insider noted issues with composite stringer clips essential for component assembly. Spirit spokesperson Joe Buccino asserted that these problems had not affected deliveries to Airbus.

Airbus is monitoring performance at the Kinston facility by deploying its employees there. Buccino clarified that this measure is part of a long-term improvement initiative, rather than indicative of acute production issues.

Airbus acknowledged ongoing challenges with its supply chain, particularly with aerostructures. A spokesperson stated, "Spirit is part of that," and emphasized the company's commitment to meeting targets and increasing supplier engagement where necessary.

Special Flights

Reports indicate rare flights of the Antonov An-124 cargo plane have emerged as a response to supply chain stresses, ferrying A220 wings by air instead of sea. Quebec media outlet TVA Nouvelles reported that this aircraft attracted attention during flights to Quebec City, where A220 assembly takes place.

According to planefinder.net, the plane made several trips from Belfast to Montreal since mid-September. An insider at the A220 factory mentioned that the costly cargo flights were necessary to sustain production flow. Spirit confirmed a number of flights were undertaken, citing a notable rise in A220 production, while Airbus indicated these measures were proactive to meet production requirements.

Airbus CFO Thomas Toepfer previously discussed supply challenges primarily regarding engines and landing gear, but analysts have expressed concerns about problems affecting multiple critical parts in the supply chain. As Bernstein analysts highlighted, "Our greatest concern here is that what Airbus needs to do is not just fix one supplier situation, but multiple ones."